SAIF partners moves to NCLT against Srinivas Raju alleging fraud

A fund of SAIF Partners has moved the National Company Law Tribunal, accusing venture capitalist Chintalapati Srinivas Raju and his firms of accounting fraud and  syphoning off money from a company where the private equity firm had made an investment. On the complaint, the Hyderabad bench of the NCLT restrained Associated Broadcasting Company Ltd (ABCL), the operator of the TV9 bouquet of satellite TV channels, from selling its shares or assets until further orders, a usual practice by any adjudicating authority to protect the interests of the petitioners airing serious concerns over the safety of their investments. Raju and his associates controlled ABCL with a nearly 82% stake, which they recently agreed to sell to a consortium of two Hyderabad-based infrastructure groups for around Rs 460 crore. TV9 chief executive Ravi Prakash and other employees own around 18% of the broadcaster. SAIF Mauritius sought to block the deal claiming that the funds it invested ten years ago in IVision Media, another company controlled by Srini Raju, were given to ABCL as interest-free loans without its consent and as part of a ploy to siphon off the money. Raju denied any wrongdoing, and also told that the NCLT interim order wouldn’t affect him since he had already completed the sale of the stake. According to his interpretation, the NCLT order was to ABCL, restraining it from selling its shares in subsidiaries or assets. In its counter plea filed before the tribunal, ABCL said SAIF was making *false allegations as the investment* by IVision Media had the approval of the PE firm’s nominees on its board. The investment was also disclosed in ABCL’s financial statements, it said. Next hearing in the case is scheduled for Thursday. In its petition, SAIF said it had in August 2008 invested Rs 50.37 crore for an 80% stake in IVision Media, which had proposed to take up collection of news content for distribution to print media, radio channels, TV channels, Internet portals and others. The Mauritius investment firm claimed it was assured that IVision Media would be merged with ABCL and it would get a 14.29% stake in the merged entity. Raju and his associates had also agreed to provide it an exit if the merger was not completed within 24 months, the fund said. Neither the proposed merger went through nor IVision Media’s business took off, even as its net worth saw a substantial erosion, the fund alleged. SAIF claimed that it had issued notices to Raju and others seeking to exit IVision Media at Rs 90.08 crore by March 2016. Though Raju promised to resolve the issue by identifying a third-party buyer, neither the contractual obligations nor its exit rights were honoured, it alleged.

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