Trikona Trinity Capital Plc, the AIM-listed real estate fund focused on India, is all set to appoint Ajay Piramal Group-promoted Indiareit Investment Management Company (Indiareit) as its investment manager in India. This move follows Trikona Trinity's ongoing dispute with its Indian advisors, Trikona Advisors Ltd (TAL).
Trikona Trinity, which has invested around £230 million (IN DOLLARS) in India, has been a prolific investor in the Indian real estate between the boom period of 2006-2008. Several of its portfolio companies like IL&FS Transportation Network, Pipavav Shipyard and DB Realty have gone public in the last one year. It has also made open market exits of its investments in hospital chain Fortis Healthcare and Phoenix Mills.
Trinity Capital Mauritius Limited, a wholly owned subsidiary of Trikona Trinity, entered into an investment management agreement with Indiareit last week. The agreement is expected to be approved by shareholders of Trikona Trinity at an EGM before August 31, 2010.
An email sent TAL for a comment did not elicit a response at the time of publication of this article. An email sent to Ramesh Jogani, Managing Director & CEO of Indiareit, also did not immediately get a response.
The deal would certainly increase the assets under management of the Ajay Piramal Group promoted Indiareit Fund Advisors. Ajay Piramal Group, which also has interests in areas like healthcare, drug discovery and research, recently sold the domestic formulation business of its Piramal Healthcare for $3.7 billion to US-based Abbott Laboratories.
The PE firm currently manages one offshore real estate fund of $200 million, in which London-based private equity major 3i Group plc is an anchor investor. Indiareit also manages two other domestic funds - Indiareit Domestic Fund Scheme I (Rs 430 crore), Indiareit Domestic
Fund Scheme III (Rs 537 crore). It is in the process of raising Rs 750 crore Indiareit Domestic Fund Scheme IV including green shoe option of Rs 250 crore.
Trikona Trinity had appointed Rothschild (as lead adviser) and DTZ (as co-adviser) to assist in finding new fund managers.
In December last year, Trikona Trinity said, it would terminate the PMA (portfolio management agreement) effective March 16, 2010 of this year citing “breaches”.
TAL has said, it will seek to recover substantial damages if Trikona Trinity goes ahead with the termination. In an earlier statement, TAL said, it will be owed substantial sums of performance and management fees by Trikona Trinity and will pursue claims as and when necessary. In February, TAL said it "will lodge a claim with the London Court of International Arbitration for £112 million for the unlawful attempt by Trikona Trinity to terminate its management agreement with the Fund
six years early."
In the middle of these developments, both Trikona Trinity and TAL are facing a claim of €116 million ($168 million) from a large German investor called SachsenFonds Holdings GmbH.
Trikona Trinity had entered into a number of transactions with SachsenFonds to divest its stake in various portfolio companies in 2007 and 2008.