founder Ajay Nain moves NCLT against company, seeks to stall IPO

Rentomojo co-founder Ajay Nain moves NCLT against company, seeks to stall IPO

Furniture rental platform Rentomojo has disclosed a legal dispute with co-founder Ajay Nain in its DRHP, with the petition seeking to void a 2023 share sale and potentially halt the company’s planned IPO.

By Rachna Dhanrajani

Furniture rental platform Rentomojo has disclosed a legal dispute involving its co-founder and former director Ajay Nain, in its Draft Red Herring Prospectus (DRHP), creating a potential overhang ahead of its planned initial public offering.

According to the DRHP dated 27 March, Nain has filed a petition before the National Company Law Tribunal (NCLT), Bengaluru, alleging that incomplete or inaccurate information was shared with him during the sale of his stake in the company.

The dispute relates to a 2023 transaction in which Nain sold 2,223 equity shares, representing about 9.41 per cent of the company at the time, to the RM Employee Benefit Trust.

In his petition filed on 25 March, Nain has sought to have the transaction declared void and his shareholding restored. He has also sought the removal of the company’s promoter from the board and restrictions on the conduct of business by the current management.

Importantly, the petition also seeks to restrain Rentomojo from filing its DRHP or taking any steps towards its proposed IPO.

Also Read: Rentomojo files IPO papers; Accel, Chiratae among investors set to pare stake

Since Nain no longer holds shares in the company, he has requested a waiver of the minimum shareholding requirement needed to maintain such a petition under the Companies Act. The case’s admissibility will depend on whether the tribunal grants this waiver.

Rentomojo said it filed caveats on 26 and 27 March across relevant forums, ensuring that no interim orders can be passed without hearing the company’s arguments.

The matter has yet to be listed for hearing, and no interim relief has been granted so far.

The company is planning a public issue comprising a fresh issue of up to ₹1,500 million and an offer for sale of up to 28.4 million shares by existing shareholders.

The offer for sale (OFS) will see partial exits by existing shareholders, including early backers such as Accel, Chiratae Ventures and Edelweiss Discovery Fund, among others. The IPO will also provide liquidity to these investors who have backed the company through its growth phase.

The issue is proposed to be listed on the BSE and NSE and may also include a pre-IPO placement of up to ₹300 million.

Meanwhile, Rentomojo heads into the IPO with improving financial performance. The company has reported three consecutive years of profitability, with net profit rising sharply to about ₹43 crore in FY25, while revenue grew to around ₹266 crore.

The company has appointed Motilal Oswal Investment Advisors, Axis Capital and IIFL Capital Services as book-running lead managers for the issue.

Backed by investors such as Accel, Edelweiss and ValueQuest, Rentomojo operates a subscription-based platform for furniture and appliances and serves customers across multiple cities in India.

For now, the legal proceedings remain at an early stage, but the development introduces a potential overhang as the company prepares to go public.

(Edited by : Vivek Dubey )