Private equity firm Milestone Capital Advisors Ltd is likely to scrap its joint venture, Capstone Capital Services Pvt Ltd, that it formed with scam-hit financial institution Money Matters Financial Services.
Last February, Milestone entered in to a JV with Rajesh Sharma-led Money Matters to form Capstone Capital, a Rs 400-crore Special Opportunities Fund – I with a tenure of five years.
“Milestone is not in a condition to continue with the JV. Following the arrest of Money Matters’ Sharma, the fund stands inactive. Now Milestone has decided to scrap the JV,” a person familiar with the development told VCCircle.
When contacted, a spokesperson of Milestone said, the fund was currently inactive. “We have launched the fund in February. But it is inactive now,” he said, while declining to elaborate further.
Capstone Capital was originally formed as an investment advisory entity to render services to an investment fund launched by Milestone Capital. But later it amended the arrangement where the services were to be provided to a scheme under Special Opportunity Fund, a new fund registered with SEBI focusing on investing in special opportunities.
Capstone, in its first transaction, invested a sum of Rs 75 crore ($17 million) in credit agency CARE (Credit Analysis & Research Ltd) for a minority stake together with Milestone Religare Investment Advisors, another JV of Milestone.
But, Money Matters hit the headlines last month for wrong reasons and its Chairman Rajesh Sharma was arrested along with top executives of some PSU banks in an alleged loan scam.
Money Matters, a small sized firm, engaged in businesses such as credit syndication, securities brokerage, lending and propreitary bond trading besides equity market advisory services was accused of bribing PSU officials to sanction large loans to housing firms, overriding mandatory conditions for such approvals.
In another development, Milestone is in talks with shipping major Mercator to set up a private equity fund, Blue Ocean Maritime Fund, that will invest in dry bulk shipping vessels and targeting a size of $100 million. “We are in the discussion stage. We will consider the risks in the shipping industry and other factors before taking a final decision,” the spokesperson said.
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