Funds sponsored by German investor SachsenFonds Holdings GmbH have formally commenced proceedings against AIM-listed fund house Trikona Trinity Capital PLC (Trikona) and Aashish Kalra and Rakshitt Chugh (who together control Trikona Advisers Ltd, who was the investment manager to Trikona) in the Supreme Court of Mauritius.
SachsenFonds had (in January 2010) claimed as much as €116 million alleging that Trikona and the investment managers ‘benefited’ from the transactions for sale of Trikona’s assets to its own funds over the last 2-3 years. It is known clearly how the parties breached contract or
laws through the transactions.
The transactions relate to purchase of various Mauritius assets which, in turn, owns stakes in Indian investment entities by Immobilien I and Immobilien II (the funds sponsored by SachsenFonds).
Trikona is resisting these claims being made against it and, in the meantime, has terminated the Portfolio Management Agreement dated 13 April 2006 between itself, a wholly owned Mauritius subsidiary and Trikona Advisers on 16 March 2010 citing ‘breaches’.
Trikona Advisers in turn intends to contest the termination of the agreement and make claims against Trikona. Rothschild (as lead adviser) and DTZ (as co-adviser) are continuing the process to select and appoint a replacement investment manager.
Trikona last month made a successful exit from its three-and-half-year-old investment in IL&FS Transportation Networks Limited (ITNL) in its IPO. Trikona sold its entire 2.5% stake at a
price of Rs 258 per share or £ 15.4 million as compared to cost of purchase of Rs 101 a piece in October 2006 at a total cost of £ 5.1 million, according to disclosures made to the London Stock Exchange.
DB Realty, another Trikona-backed firm, listed on the stock exchange has given the AIM-listed fund an unrealised gain of over 1.5x net returns. Trikona had invested £ 26.4 million in April 2007 at a price of Rs 190 per share as against the IPO price of Rs 468/share.
In the meantime, Arvind Pahwa (former head of Indian Real Estate for JP Morgan Asset Management), who was roped in as a non-executive director of Trikona last December has become CEO of SRM Realty Advisors Private Limited from 1 April 2010. SRM Realty Advisors is the investment advisor of SARE Ltd, an Indian real estate fund sponsored by the Duet group which invests in the residential sector in second and third tier cities in India.