Ramanan Raghavendran and Kumar Mahadeva are stepping down from the board of Kubera Cross-Border Fund Ltd, an India-focused private equity fund traded on the AIM market of the London Stock Exchange.
Raghavendran and Mahadeva are Managing Partners of Kubera Partners LLC that manages the $225 million fund raised in 2006.
The duo’s resignation depends on an upcoming vote, where shareholders of Kubera Cross-Border Fund will decide whether to continue the fund after its investments have been sold. Kubera Cross-Border Fund has seven portfolio companies and has total net assets of $103.6 million as of September 2011.
If Raghavendran and Mahadeva step down, the board will have four independent non-executive directors and it will eventually come down to three as the board starts disposal of investments.
VCCircle contacted the duo for comments and more information on the developments and got the following reply from Raghavendran at Kubera.
The announcement was intended to formally clarify, for our investors, that our listed fund is now being run as an L.P. We are four days away from the fifth anniversary of the fund. In a typical L.P., this is the end of the new investment period; management fees drop from a percentage of committed capital to a percentage of carrying value; and fund boards usually do not have representatives of the manager. The announcement makes all of these points, while highlighting that we’ve been running the fund in this manner since 2009.
This was all planned (and announced) back in 2009. We are now calling for a shareholder vote to formalize it as we have reached the five year mark; since the fund is listed, this formality is one that requires a shareholder vote. That is all this is — there is zero change in how the fund is managed, or our timelines, or anything else.
I note here that in terms of realized returns as a percentage of invested capital, to our investors from 2006, the fund is amongst the best performers of that vintage period. I also note that we have worked hard to ensure that the fund follows best practices for listed funds in every respect, and this announcement continues that effort.
“The changes to the board would in no way affect the active oversight and management of the company’s investment portfolio by Messrs. Raghavendran and Mahadeva. Raghavendran will continue to be the primary contact with shareholders regarding the company’s investment portfolio,” the company stated in its filing.
The board has also made changes to the fee arrangement of the fund. “With effect from January 1, 2012, the investment management fee will revert to 2 per cent per annum of the net asset value. This will represent a significant reduction in the investment management fee payable going forward. The board retains the ability to revisit the investment management fee if the company’s circumstances change,” according to the filing.
According to its September report, Kubera Cross-Border Fund has invested a total $127.1 million and realised $39.9 million through two exits. The carrying value of its existing seven investments is $78.6 million.
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