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Tainted Money Matters Exits PE Biz; Ends JV With Milestone Capital

07 February, 2011

Scam-tainted Money Matters Financial Services has decided to exit its private equity businesses as the company terminated its joint venture with private equity firm Milestone Capital and cancelled its capital    commitment as a sponsor to Money Matters Venture Capital Fund. The company has also appointed Dinesh Chandra Babel as the Additional Director (Independent), the company said, in its filing to BSE.

VCCircle was the first to report that Milestone has, internally, decided to scrap the JV with Money Matters after it was accused of bribing senior officials of public sector financial institutions including that of LIC Housing Finance, to arrange corporate loans.

Last February, Milestone entered into a JV with Rajesh Sharma-led Money Matters to form Capstone Capital, an Rs 400-crore Special Opportunities Fund – I with a tenure of five years. Capstone, in its first transaction, invested a sum of Rs 75 crore ($17 million) in credit rating agency CARE (Credit Analysis & Research Ltd) for a minority stake together with Milestone Religare Investment Advisors, another JV of Milestone.

When contacted, Milestone MD and CEO, Ved Prakash Arya told VCCircle that they haven’t raised money for the proposed Rs 400 crore JV Capstone. “We will return the money invested in CARE,” he said when asked. Despite many attempts, Money Matters spokesperson could not be contacted.

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.

But the fund remained inactive despite its first small investment due to few reasons. Later 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 and many top officials including its Chairman Rajesh Sharma were arrested.


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Tainted Money Matters Exits PE Biz; Ends JV With Milestone Capital

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