Mumbai: As a “small, hidden, obscure,” Mauritius investment vehicle, IPE Plus Fund, finds itself in the crosshairs of Hindenburg Research, its New Delhi-born, Singapore-based, founder and chief investment officer (CIO) Anil Ahuja finds himself in the news yet again.
Ahuja was among the first to make a private equity bet on the Adani Group, while he was at 3i Infrastructure, which he joined in 2005. In 2007, 3i made the first investment from its Indian infrastructure fund, paying $227 million (Rs897 crore at the time) for an undisclosed stake in Adani Power Ltd, then a fully-owned subsidiary of flagship Adani Enterprises Ltd. According to a TOI report, with the enterprise value of Adani Power pegged at Rs 10,850 crore, 3i’s equity stake in Adani Power worked out to around 8%. This was 3i’s largest transaction in India since it started investing in the country in mid-2005. It held onto the stock for over seven years. When it sold a 2% block in the company in 2014, VC Circle calculated a 25-30% loss in pound sterling (40% in dollar terms) largely on account of sharp depreciation of the Indian currency. Ahuja left 3i in 2013 and joined IPE Plus Advisors in January 2014.
Read More: Madhabi Buch made disclosures, investors should read Hindenburg disclaimer: Sebi
The Adani Power investment, said people in the private equity industry, was one of the many misfires that eventually led to 3i, a London-listed company part-owned by the eponymous British private equity group, to stop investing in India in 2013, following a period of volatility and poor returns. Of the $875 million that the fund deployed in seven investments in India from its $1.2 billion 3i India Fund under the watch of Ahuja, it failed to exit a single investment in six years. Adani Power was the only holding that got listed on the Indian bourses in 2009, but the value of 3i’s stake in the firm, purchased for $227 million in 2007, dropped by around $85 million, according to ET’s calculations from that period.
As of March 2013, the fund’s India investments were valued at about 80% of their cost in dollar terms, 3i said in an official statement in May 2013. In a report in the same month on 3i’s shift in its investment thesis, the Financial Times cited Iain Scouller, analyst at Oriel Securities, as saying, “the main negative appears to have been the share price of Adani Power and the weakness of the Indian rupee against sterling, with the Indian portfolio seeing an unrealised loss of £26.3 million. The European portfolio performance was much better, with an unrealised gain of £51 million.”
In the same year, Ahuja left the firm after having worked there about eight years, recalled a former colleague of his who knew him well from his earlier stint as a Citi banker.
Ahuja said he does not recollect the details of those investments as they were “a long time ago” and added, “I had taken a call to retire when I turned 50 and I did. The Adani Power exit must have happened after I left 3i.”
Blast from the past
The latest Hindenburg report comes almost a decade after his earlier investment bets in Indian power plants, toll roads and utilities came under scrutiny following massive write-offs. Ahuja is also a former director in two Adani Group companies.
“I have been teaching underprivileged kids for last six years,” Ahuja told ET from Singapore, where he is currently based, adding that he’s also engaged in the study of religious scriptures. “These allegations came as a bolt from the blue.”
That’s a departure from the image of Ahuja that several of Ahuja’s peers, colleagues and promoters of portfolio gave ET–that of a banker-turned- hard charging PE-boss with a penchant for Maserati sports cars.
Hindenburg says IPE Plus Fund was set up by Ahuja through wealth management firm India Infoline (IIFL). According to the US short-seller, Sebi chief Madhabi Puri Buch and her husband Dhaval Buch had invested in this fund in June 2015, which was also drawn upon by Vinod Adani, brother of billionaire businessman Gautam Adani. At the end of December 2017, the IPE Plus Fund had only $38.43 million in assets under management (AUM), as per IIFL disclosures. Buch and her husband said they pulled out of the fund when Ahuja left in 2018.
Interestingly, Buch joined the Indian Institute of Management, Ahmedabad, the same year that Ahuja passed out–1986. Ahuja’s wife, Latika Monga Ahuja also passed out from the same B-School and as per her LinkedIn profile is a director of Piramal Asset Management Pte Ltd, Singapore.
“Beyond being used as an alleged funnel for Vinod Adani’s money,” the fund and its CIO also had close ties to the Adani Group, Hindenburg alleged in the report published on Saturday. “At the same time, Ahuja was a director of Adani Enterprises where he served three terms spanning nine years ending in June 2017, per his biography and exchange disclosures. Prior to that he was also the nominee director in Adani Power.”
Ahuja rejected the Hindenburg reports inferences.
“I have been at the senior most levels of international finance for three decades,” he said. “The question of being on the board of Adani Group companies and investing even a cent in them does not even arise. It’s insider trading 101. Hindenburg is clutching at the straws.”
While emphasising that at no point had IPE or Ahuja invested in any bonds, equities or derivatives of any Adani Group company, the Buch family, in a detailed statement, said, “The decision to invest in this fund was because the chief investment officer, Anil Ahuja, is Dhaval’s childhood friend from school and IIT Delhi and, being an ex-employee of Citibank, JP Morgan and 3i Group Plc, had many decades of a strong investing career. The fact that these were the drivers of the investment decision is borne out by the fact that when, in 2018, Mr. Ahuja, left his position as CIO of the fund, we redeemed the investment in that fund.”
The Adani Group in a statement to the exchanges on Sunday also said, “Anil Ahuja was a nominee director of 3i investment fund in Adani Power (2007- 2008) and, later, a director of Adani Enterprises until 2017… The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing.”
Banker, Investor
After IIM-A, both Ahuja and his wife joined Citi in the late 80s. He was in transaction services and his wife in corporate banking, rising up the ranks before she went on to join Citibank Venture Capital India (CVCI). He went on to become the officer in charge of the transaction banking vertical himself. Veterans in the organisation recall that at around the same time the Wall Street bank had started a company for software and tech services. All Citi employees, including junior and clerical staff got shares of Citicorp Information Technology Industries Ltd. (CITIL) on a preferential basis. A few years later, when the bank was under financial pressure, it transferred its shares in CITIL to CVCI at a discount “to show profits.” By then, Latika Ahuja was already in CVCI.
CITIL under CVCI became Iflex Solutions and eventually got listed. “Before the IPO, Ahuja and some other senior Citi executives had amassed a large chunk of the company’s shares buying from his colleagues at a discount who did not have any other liquidity option,” said a former Citi colleague who did not want to be identified. At one point, the Ahujas were among the single largest individual shareholders of Iflex, which was subsequently bought by Oracle in 2005. Citi’s $400,000 investment led to a bumper payout after Citi sold its 42% interest for $592 million.
“Ahuja was known for his intelligence and aggressive bets in both Citi and later in his PE stints with JP Morgan and 3i. Some worked, many didn’t,” said a former PE colleague who didn’t want to be identified.
IPE Plus Fund currently trades as 360 One Wam Ltd. On Sunday, the company said “IPE Plus Fund 1 made zero investments in any shares of the Adani Group either directly or indirectly” throughout its tenure in the six years to October 2019.
