NRIs move Mauritius Supreme Court against ICICI Venture; Accuse PE firm of misleading them

ICICI Bank and the Western India Trustee and Executor Co have also been also been named as respondents.

ICICI Ventures, India's largest PE fund, says the allegations are baseless and that no promises guaranteeing a rate of return were ever made.

Around 69 investors, mostly from the United Arab Emirates and Gulf Cooperation Council (GCC) countries, had invested around $34.7 million in the $220-million Dynamic India Fund (DIF) III since 2005, after being allegedly promised a return of 25%. Instead their investments are now under water.

The investors claim that the fund manager did not keep them informed about the subsequent performance of the fund or about the quality of assets in which the fund had invested. Further, the aggrieved investors allege there was huge delay in completion of projects about which they were also kept in the dark.

When the fund's tenure came to an end, they were told that their investments were valued below par.

At that stage ICICI Ventures asked them to remain invested for another three years. Instead these investors have approached the Mauritius legal forum claiming $69 million in damages.

ICICI Venture's spokesperson said in an emailed response to queries that it is yet to be served with any legal notice in relation to DIF III.

"The allegations levelled by a set of investors are totally baseless, not supported by facts and are malicious.

We will respond appropriately if any litigation is frivolously filed against us," a spokesman said.

"Projects in real estate have a long gestation period and hence the returns accrue over a period of time.

It is also common knowledge that globally PE as an asset class does not guarantee returns given the equity risks involved," he explained.

The investors disagree. Said 71-year-old Gulab Patil: "After over eight years, we (NRI investors) do not see any light at the end of the tunnel. There is no firm commitment by the ICICI management.

We are awaiting some clearances from Mauritius and then serve a legal notice to the Indian defendant."

The investors have filed similar complaints with the Securities and Exchange Board of India, the Reserve Bank of India as well as the Financial Services Commission, the regulator of non-banking financial services in Mauritius.

"There are no prevailing laws, which can protect the NRI investor as compare to the Singapore, US, UK or other European countries," said Gordhan Chandiramani, who says he invested half a million dollar in the fund.

A source in ICICI Venture Funds Management Company said the fund's tenure that came to an end in April this year has now been extended to April 2017 to optimise realisations from the portfolio. The Dynamic India Fund III had approached investors with two options. They could either continue with the investment or exit at the current net asset value (NAV).