A group of 69 NRI investors has dragged ICICI and its associated companies to Court in Mauritius seeking recourse for the huge losses they have allegedly incurred on investments made in Dynamic India Fund III (DIF III), promoted by ICICI Ventures and ICICI Bank.
The petitioners are claiming a total of $103 million from the five entities involved. The case is being heard by the Mauritius Supreme Court.
According to them, DIF III invested in real estate projects that flopped, instead of world class ones as the marketing teams promised.
“A plaint with summons was lodged before the Supreme Court of Mauritius by a group of NRI and foreign investors against (DIF III), International Financial Services Ltd (IFS), ICICI Venture Funds Management Company Ltd (ICICI Venture), ICICI Bank and the Western India Trustee And Executor Co Ltd,” said Banymandhub Boolell Chambers, the legal firm handling the case.
Gulab Patil, an NRI from Pune now based in Dubai, said that the two Mauritius-based parties had been issued with summons in July while the three in India received the summons last week.
In 2005, nearly 500 NRIs across the globe had invested in the fund, which had a corpus of $220 million, he said, adding that the 69 NRIs suing the company had invested $34.7 million. In their petition, the investors have said that ICICI invested in 13 projects in India, with nearly 60 per cent of the corpus in three properties in Hyderabad and two in Mumbai. This despite the original promise that investments would be spread across various cities. All but one stood incomplete as stated in their Report of March, 2014, nine years after the investments were made, they said.
Work on a township project in Chennai, in which the Fund invested, has not even commenced due to serious infrastructure problems. Two or three projects are facing severe financial liquidity problems. Only one project in Pune has been completed after eight years and that too has considerably under-performed from the projected growth, the investors said.
“Thus, it is a case of total neglect of due diligence, …outrageous underestimation of cost and completion, alleged negligence and overt manipulation of finances for escalating costs and serious blunders in judgment of selection of projects,” the petitioners said in a statement.
Our Mumbai Bureau adds: Commenting on the case, an ICICI Venture spokesperson said in a statement: “The allegations levelled by a set of investors, constituting only 12 per cent of the investors in the concerned funds, are totally baseless, not supported by facts and malicious.’’
The spokesperson added that ICICI Venture manages assets of over $2.5 billion and has delivered returns to its investors across various PE funds.
“Further, it is common knowledge that globally, PE as an asset class does not guarantee returns given the equity risks involved. Also, projects in real estate have a long gestation period and hence the returns accrue over a period of time,” the statement added.
As for the legal proceedings, ICICI Venture has said it would take necessary steps based on legal advice.