Mumbai-based alternatives assets management firm ICICI Ventures, a unit of one of India’s biggest private sector lenders ICICI Bank, has been sued by a group of non-resident Indian investors seeking $103 million in damages for losses allegedly incurred on their real estate investments.
As many as 69 investors are claiming losses from their investments made in ICICI Venture’s real estate fund called Dynamic India Fund III (DIF III). PERE understands that these investors represent around $30 million of the overall $500 million raised by the fund.
ICICI Ventures has denied the allegations. The firm’s official spokesperson said in a statement that the “allegations levelled by a set of investors, constituting only 12 percent of the investors in the concerned funds are totally baseless, not supported by facts and are malicious”.
DIF III was launched in 2005 to develop, lease and own office, residential and retail assets in India.
The investors have dragged ICICI Ventures, its parent company ICICI Bank, as well as other associated companies to the Mauritius Supreme Court. In a statement released by Banymandhup Boolell Chambers, the legal firm handling the case, the investors said that even after nine years, only one out of the 13 projects the fund invested in was completed as of March this year.
“[The] 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 in dire financial liquidity problems. Only one project in Pune has been exited after eight years and that too considerably under-performed from projected growth,” they added.
For its part, ICICI Ventures said that a cash exit option was offered to all 500 investors in March 2014, which was accepted by some.
The firm has also decided to extend the fund’s life by three years to optimize the realizations from the portfolio. PERE has learned that at the end of the fund’ original life of nine years, 50 percent of the total investments had been exited at a multiple of 1.5X.
“ICICI Venture manages assets of over $2.5 billion and had delivered returns to its investors across various PE funds. Further, it is common knowledge that globally PE is an asset class that does not guarantee returns given the equity risks involved. Also, projects in real estate have a long gestation period and hence returns accrue over a period of time,” said the company spokesperson.