ICICI board unaware of Kanodias' investment in Deepak Kochhar's NuPower

Firstland made no return on NuPower investment

Firstland Holdings, a company based in Mauritius owned by the Kanodia family, did not make any return on its investment in the cumulative convertible preference shares (CCPS) that it made in NuPower Renewables, which it held for over two years.

Under the original resolution, Kanodias’ investment would have resulted in 49 per cent stake in NuPower, which it relinquished in favour of DH Renewables Holding, the company that bought the CCPS from Firstland. NuPower Renewables had received Rs 3.25 billion infusion by way of CCPS from Firstland Holdings in 2011 and in 2012. Firstland, part of the Matix Group run by Yogendra Kanodia and son Nishant, sold the CCPS to another Mauritius-based entity DH Renewables, a subsidiary of Accion Diversified Strategies Fund, based in Cayman Island for Rs 3.25 billion.

“It was a no profit, no loss exit from NuPower and the money received from Accion Diversified Strategies Fund was then invested in a fertiliser plant in Bengal,” said a source close to the development.

Firstland’s CCPS were to be converted into equity shares of the company. “Post-conversion of all the CCPS into equity shares of the company, the investor will hold equity shares representing 49 per cent of the share capital of the company calculated on a fully diluted basis,” the original resolution had said. Kanodias received neither dividend nor capital gains on its NuPower investment. The original resolution on the CCPS did not provide any details on dividend payments.

Nishant is Essar group promoter Ravi Ruia’s son-in-law.  

The antecedents of DH Renewables and Accion Diversified Strategies Fund are not known and the Indian income tax department has sent letters to Mauritius government and to Cayman Island authorities seeking more information on the fund. While raising funds from Axis Bank and Central Bank of India, NuPower Renewables had said Accion was a private equity fund with $250 million corpus.

DH Renewables also put in additional funds of Rs 1.28 billion in NuPower and after the conversion of the CCPS it acquired from Firstland; the fund owned 55 per cent stake in NuPower Renewables in March 2017, and the next-biggest shareholder was Deepak Kochhar. While ICICI Bank did not give funds to Kanodia-owned companies, the bank did lend funds to Essar group’s foreign subsidiary in Minnesota United States which has now turned into a non-performing asset (NPA). ICICI Bank was among the seven banks — mainly foreign banks, which had lent funds to Essar Minnesota.

Meanwhile, the ICICI Bank board, consisting of bank executives, independent directors and nominees from the government and Life Insurance Corporation of India, was not aware of Firstland’s investment in NuPower.

An ICICI Bank source said the Kanodia family was not a borrower of ICICI Bank, and hence the bank’s board was not informed as the conflict of interest guidelines were not applicable.

     Zero Return

• Firstland Holdings invested in NuPower in return for compulsorily convertible cumulative preference shares
• Multiple tranches saw over Rs 3 bn in investments
• No conversion took place
• Firstland instead sold its shares to DH Renewable Holdings

 

Shareholder advisory companies are raising eyebrows at the ICICI Bank board not being aware of Firstland’s investment.

“No party has denied that there wasn't any connection between the borrowers - Essar, Videocon group, and NuPower. The conflict of interest seems to be apparent,” said Shriram Subramanian, founder and managing director, InGovern Research Services, a shareholder advisory.

NuPower Renewables is owned by Deepak Kochhar, husband of ICICI Bank CEO and MD Chanda Kochhar. NuPower made news after the Central Bureau of Investigation filed a preliminary enquiry against the company and Videocon group that the latter gave a Rs 640 million loan to NuPower via a subsidiary.

ICICI Bank board, Nupower and Videocon have denied any wrongdoing.

Emails to NuPower and Kanodias sent on Wednesday did not elicit any response. An Essar group spokesperson declined to comment.