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Private equity investors and lenders of retail chain Subhiksha Trading Services have opposed its merger with Chennai-based Blue Green Constructions and Investments. ICICI Venture, PremjiInvest and one of the lenders of Subhiksha have moved court to block the reverse merger, reports Economic Times. Both the investors had earlier approved of the reverse merger, when the equity markets were still a fundraising option. Now PremjiInvest has approached Madras High Court.

Subhiksha had acquired 40% in Blue Green for Rs 2 crore in June last year in order to merge with the firm, and then consequently list on the NSE and BSE. These investors have asked Subhiksha to stop the merger till CDR (corporate debt restructuring) is closed.

ICICI Venture has said that Subhiksha has not presented them or the board with the 15 month audited accounts ending June 31, 2008. Recently the retailer's four directors, which included ICICI Venture MD Renuka Ramnath and Joint MD Rajiv Bakshi.

The cash strapped retail chain is also reportedly on the block and looking for a buyer or a strategic investor. Investment bankers have approached major retail players like Aditya Birla Retail, Reliance Retail and the Future group for the deal.

ICICI Venture holds a 23% stake in Subhiksha, and reportedly has a golden share agreement with the retailer under which it will have an overall control even if its stake falls to 2%. PremjiInvest holds a 10% stake in Subhiksha, which it bought from ICICI Venture last year. Asset management firm ICICI Prudential bought a 5% stake for Rs 75 crore in June 2007. The retailer's lenders include HSBC, Axis Bank and Yes Bank. R Subramanian, managing director of Subhiksha, controls 59% in the firm.

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