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Continental Africa Holdings (CAHL), which apparently agreed to buy Financial Technologies India’s (FTIL’s) Mauritius-based Bourse Africa (BAL) exchange for $40 million (Rs 250 crore), does not seem to have the resources to pay, according to its corporate filings in Mauritius.
According to these records, unearthed by investors, CAHL was incorporated in Mauritius on July 17 and had a share capital of 1,000 Mauritian Rupees (about Rs 2,000). Two shareholders, Nigeria-based Pan African Capital Plc and First Heritage Business Corp, a company registered in the British Virgin Islands (BVI), held 500 shares each in CAHL.
Investors of National Spot Exchange (NSEL), who hired forensic firms across three countries to dig out these details, have written to the Securities and Exchange Board of India (Sebi) for a probe into the transaction.
In their complaint through a law firm, Delhi-based Smita Bhartia and Mumbai-based Meenal Maheshwari alleged the transaction was an “eyewash” and that the bourse, worth at least $100 million (Rs 636 crore) was sold at a discounted value to some “shell companies”, with the intention of buying it back at a later date, a charge denied by FTIL.
They’ve also notified the enforcement directorate, ministry of corporate affairs, Forward Markets Commission and the city police’s economic offences wing.
In response to an email query, an FTIL spokesperson said, “We are not aware of investors complaining against or questioning the genuineness of the transaction of sale of Bourse Africa and credential of the buyers.” He added the sale of shares was to comply with the regulatory requirement.
FTIL contended CAHL was incorporated in Mauritius, floated by a consortium of entities which “are not defunct companies”. “Further, the entire transaction will be subject to approval of the Financial Services Commission, Mauritius (regulator of Mauritius).”
Warning the investors of legal action for spreading rumour, the spokesperson said, “With regard to valuation, the investor’s allegation is baseless and trying to mislead the regulator and the common people. The so-called investor, who is actually a trading member, is habituated to spread rumors/going forum hunting and seeking to intimidate the court. Recently in one such matter, the Bombay High Court has directed that contempt notices be issued against such investor groups/members.”
On November 17, FTIL informed the BSE exchange that the board of directors of FT Group Investments Pvt Ltd, Mauritius, a wholly owned subsidiary, had approved the sale of BAL (together with wholly owned subsidiary Bourse Africa Clear Ltd) to CAHL, subject to regulatory approvals. “The entire transaction is expected to be completed within the next 210 days,” the filing said.
Pan African Capital, which has 50 per cent stake in CAHL, is a listed company based in Victoria Island of Lagos state, Nigeria. Investors alleged, citing due-diligence reports by Lagos-based lawyers, that Pan African had not made any disclosures of the Mauritius transaction despite being a publicly listed company. The website suggested it was an investment banking and advisory company. An email to the company did not elicit a response.
Further, investors carried out due-diligence on Abhir Petroleum, the largest shareholder with 106 million shares of Pan African. It appears Nigeria-based Abhir had filed its last annual return in 2009. According to these filings, it had a share capital of a million naira (Rs 3.4 lakh).
BVI-based First Heritage Business Corp, owned the other half of CAHL, was incorporated on April 1 this year. The details of shareholders and management detailswere not accessible, as the regulatory authority of BVI does not share these with the public.
An email sent to the Sebi spokesperson remained unanswered.
