NRIs move Mauritius SC against Indian investment firm ICICI Venture Funds
They have accused the private equity (PE) firm of misleading them by raising a real estate fund that eventually underperformed while they were promised a certain return. (Image: Company)
A group of Non-resident Indian (NRI) investors have filed a case in the Supreme Court of Mauritius against Indian investment firm ICICI Venture Funds Management Company.
They have accused the private equity (PE) firm of misleading them by raising a real estate fund that eventually underperformed while they were promised a certain return.
Around 69 investors, mostly from the United Arab Emirates and Gulf Cooperation Council (GCC) countries, had invested around $34.7 million (approx Rs 1.06 billion) in the $220-million (approx Rs 6.71 billion) Dynamic India Fund (DIF) III since 2005, after being allegedly promised a return of 25%.
The investors claim that the fund manager did not keep them informed about the performance of the fund or the quality of assets in which the fund had invested.
Furthermore, the aggrieved investors allege there was huge delay in completion of projects regarding which they were also kept in the dark.
Finally, when the fund’s tenure came to an end in April this year, they were told that their investments were valued below par.
At that stage, ICICI Ventures asked investors to remain invested for another three years, where tenure was extended to optimize realizations from the portfolio by April 2017.
However, playing it safe, the investors have preferred to approach the Mauritius legal forum claiming $69 million (approx Rs 2.1 billion) as compensation.
The investors have filed similar complaints with India’s stock trading regulator SEBI (Securities and Exchange Board of India); India’s central bank RBI (Reserve Bank of India); as well as FSC (Financial Services Commission), the island economy’s premier non-banking financial services regulator.
ICICI Venture’s spokesperson said in an email that it is yet to be served with any legal notice in relation to DIF III.
“The allegations leveled by a set of investors are totally baseless, not supported by facts and are malicious. We will respond appropriately if any litigation is frivolously filed against us,” he said.
“Projects in real estate have a long gestation period and hence the returns accrue over a period of time,” he explained.
He added that it is “common knowledge” that globally PE as an asset class does not guarantee returns, given the equity risks involved.
As of now, the Dynamic India Fund III under ICICI Venture Fund had approached investors with two options. They could either continue with the investment or exit at the current net asset value (NAV).
As per court documents, DIF III was promoted and set up by ICICI Venture Funds Management Company and ICICI Bank as a special purpose vehicle for overseas investors to invest through India Advantage Fund III (IAF), in the real estate market in India. ICICI Venture Fund Management was appointed to act as the investment manager of IAF III in 2005.
About ICICI Venture Fund Management Company and DIF III:
ICICI Venture Fund is a specialist alternative assets manager based in India. The firm is a wholly owned subsidiary of ICICI Bank, the largest private sector financial services group in India. ICICI Venture Fund currently has $2.5 billion assets under management across private equity, real estate, infrastructure and special situation funds.
DIF III is in the business of developing, leasing, owing and selling quality office buildings, residential premises and retails spaces launch. It was promoted and set up by ICICI Venture Fund in January 2012 and has made a total of 13 investments till date.
Source: Economic Times