NRI investors Vs ICICI Venture: Sebi probe sought

After moving the Mauritius Supreme Court seeking USD 103 million in damages from private equity fund ICICI Venture, a group of around 80 NRI investors have sought a probe from markets watchdog Sebi in the matter.
In a 26-page complaint sent to the Sebi on October 16, the investors alleged that two realty-focused funds from ICICI Venture-the Dynamic India Fund III & IV- have taken money from them promising high returns to the tune of 25 per cent.
However, none of the 13 projects in which their money was invested are completed well after the committed nine-year gestation period, the complaint said.

The investors want the Sebi to probe the allegations of misrepresentations, concealment and omission of material facts, misleading statements, negligence, and breaches of duty towards the investors by not exercising care and due diligence while managing their investments, as they claim that these misconducts have diminished the value of their investment considerably.
When contacted, a Dubai-based investor Gulab Patil, who has been authorised by around 500 investors with a power of attorney, told PTI that he has filed the complaint with Sebi on October 16.
Patil, who hails from Pune, said that he had invested USD 2.5 lakh in 2005 when these two funds were launched.

The complaint by 78 investors, mainly NRIs and persons of Indian origin, urged Sebi to probe against ICICI Venture Funds Management Company (ICICI Venture), ICICI Bank, Dynamic India Fund III & IV (DIF III & IV), India Advantage Fund III & IV (IAF III & IV), under the provisions of the Prohibition of Fraudulent and Unfair Trade Practices relating to securities markets) Regulations 2003 of Sebi.

ICICI Venture has already denied all the charges as "totally baseless and malicious".
ICICI Venture also countered the claim of damages, saying the aggrieved investors accounted for a small percentage of those invested in the fund and they had refused to take an 'cash exit option' although returns were never guaranteed.

"The allegations levelled by a set of investors, constituting only 12 per cent of the investors in the said fund, are totally baseless, not supported by facts and are malicious," an ICICI Venture spokesperson had said.
DIF III &IV schemes, registered in Mauritius, are structured as feeder-funds by ICICI Venture and are registered with the Sebi as foreign venture capital investors.
The fund was promoted to be a close-ended fund with a corpus of USD 220 million. The fund was aimed at developing, leasing, owning and selling quality office and residential properties and retail spaces.