After a seven-month struggle to get the authorities cracking on an alleged conspiracy by Hong Kong based Baring Private Equity Asia and Nord Anglia Education Advisors to take over Singapore-based Global Indian Schools Foundation (GISH) by deceit, the NM Marg police has finally lodged the FIR (first information report) on Monday.
After a seven-month struggle to get the authorities cracking on an alleged conspiracy by Hong Kong based Baring Private Equity Asia and Nord Anglia Education Advisors to take over Singapore-based Global Indian Schools Foundation (GISH) by deceit, the NM Marg police has finally lodged the FIR (first information report) on Monday.
GISH which has 20 schools across six countries including India, in mid of 2013 had filed a complaint of a Rs 65 crore ($10.6 million) cheating and conspiracy case against BPEA Equity Advisors India and Baring Private Equity Asia group, a major private equity investment player in Asia.
The matter was pending with Economic Offences Wing for two months since August 2014 before being tossed over to the NM Joshi Marg police for investigation.
S Jaykumar, deputy commissioner of police under whose jurisdiction NM Joshi Marg police station falls, said, "Preliminary investigation took a while because the case dates back to 2009."
He refused to comment on why EOW took two months to pass on the file to the local police for investigation, but acknowledged that the FIR was lodged against senior management of Baring and Nord Anglia.
The FIR has been registered against CEOs of the respective companies, Jean Eric Salata of Baring and Andrew Fitzmaurice of Nord Anglia, managing director of Baring Private Equity Asia, Jimmy Mahtani besides other directors of group companies.
Nord Anglia Education Ltd, is also a company owned by Baring and listed on the New York Stock Exchange. The complaint against Jimmy Mahtani and 11 others have been made for offences under Section 417, 418, 420, 422,425, 503, 506, 107, 108, 108 A, 34 read with Section 120 B of the Indian Penal Code.
Surpisingly, a statement issued by Richard Barton, managing director of Baring's PR agency, Newgate Communications states the contrary: “Baring Private Equity Asia has not currently received any notification of an FIR being registered. There is no basis for any liability, whether civil or criminal, on the part of Baring Private Equity Asia, its employees or any related entity in connection with this matter. We will deal with this with the full force of the law and will cooperate with any enquiries in the event they are made.”
The case dates back to 2009 when Baring group, through Deutsche Bank, Singapore which acted as advisor to GISH, expressed interest in making sizable $75 million investment towards the institution's inorganic growth.
As an investor, Baring subsequently entered into a Securities Purchase Agreement (SPA) that prescribed each installment of $25 million was done through issuance of a convertible note that would be converted to equity after five years. If GISH failed to achieve the targeted profit in the year 2012, a conversion formula would facilitate Baring in acquiring shares of GISH at a discounted price and increase its management control.
As a minority shareholder of less than 25% with the first $25 million investment coming in and despite assurances from Baring founder, Jean Eric Salata and Jimmy Mahtani, managing director BPEA Advisors of a 'non-transfer of management control' clause that safeguarded business interests of GISH, Baring began to veto every progressive measures towards acquisitions, which was seen as a step to scuttle the 2012 business plan, GISH said in its complaint. In January 2012, they blocked and vetoed acquisition of Al Worood School by GISH. In February-March 2012, they again blocked acquisition of AL-Rayan Group of Schools in Kuwait and in March-May 2012, they also vetoed yet another attempt of GISH to acquire a few Vietnam schools.
According to GISH, the complainant, key managements of Baring Private Equity Asia and BPEA Equity Advisors Private Ltd (India) have been involved in taking over the company clandestinely by causing deliberate losses to fulfill contractual obligations. The entire exercise of Baring group has been allegedly to get management control without parting with a single sum of the promised $75 million to be invested by GISH. Through this move Baring could offload the stake to Nord Anglia Education, a wholly owned subsidiary of Baring Private Equity Asia, the complainant has accused through its advocate Majeed Memon of MZM Legal. Baring allegedly acted as a front and proxy for Nord Anglia which sought control in GISH.
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