Ivy league school Yale University entered into a pact with offshore legal firm Appleby to invest $100 million in India from June 2013 via the Mauritius route.
Appleby records show that Yale University’s Assistant General Counsel Stephanie Chan and Appleby’s Malcolm Moller signed an agreement for legal help on May 15, 2013.
Yale has entered into agreements with several Indian institutions, including Jawaharlal Nehru University, University of Delhi, Ashoka University and The Energy and Resources Institute (TERI).
Appleby documents reveal that Yale University entered into an agreement with the Bermuda law firm to invest in India. These investments were to be made through Singapore-based Nalanda India Equity Fund, Hong Kong and Mumbai-based Steadview Capital Management and the specially formed LTR Focus Fund, a Yale-only vehicle domiciled in Mauritius, to invest alongside the Mauritius investment vehicle used by the master fund…
The Nalanda India Equity Fund Ltd is a fund of Nalanda Capital, a Singapore-based private equity firm, which invests exclusively in small to mid-cap companies in India. There is no information available in the Appleby databse on where any investments were made following the agreement.
Records show that Yale’s Stephanie Chan wrote to Appleby’s Malcolm Moller on May 2, 2013: “It has been a few weeks since we last corresponded about Mauritius law matters for the Nalanda India Equity Fund transaction. I greatly appreciated your responsiveness and guidance with those issues, and am writing now to enquire as to whether you would be available to assist Yale with another transaction involving an investment into India through a Mauritius domiciled entity. The fund sponsor is Steadview Capital, a manager that Yale is engaging for the first
On May 10, 2013, Chan again wrote to Moller, suggesting an amendment requesting confidentiality in the draft agreement. “I note that it contains a blanket consent to your use of our name and disclosure of the details of the transactions on which you have served us. We would prefer if this consent could be given on a case by case basis after we have been provided with details of the exact disclosure to be made and the recipient of the information. In particular, the blanket consent runs up against the Yale Investments Office’s desire to keep the University’s investments confidential. Since most, if not all, of the matters we will engage you on will relate to the University’s investments, such disclosures could be problematic.”
Chan also detailed proposed investments through Steadview: “Yale will be investing for the first time with Steadview Capital Management, an India public equities-focused manager with offices in Hong Kong and Mumbai. We are hoping to fund $30 million on June 1st, and to add to that commitment in tranches over the coming year, for a total $100 million commitment… Rather than invest in Steadview’s co-mingled master/feeder structure, we will be forming a Yale-only vehicle domiciled in Mauritius that will invest alongside the Mauritius investment vehicle used by the master fund. The Yale-only entity will be called the LTR Focus Fund and will be formed as a multi-class vehicle that will issue only one class of non-voting shares. These shares will be held by Yale University. While we have invested in Mauritius vehicles before, they have always been co-mingled vehicles. This will be our first experience with a Yale-only Mauritius entity.”
Chan’s email indicated that Yale authorities were in the process of applying for a license to SEBI as a sub-account of an FII, with the goal of being ready to trade by June 1. “Since SEBI requires a signed subscription agreement and a minimum investment of $100K to process the application, we submitted these materials and wired these funds today…,” the email stated.
In Appleby records, is a Private Placement Memorandum (PPM) regarding LTR Focus Fund dated June 1, 2013: “The Fund will obtain a tax residency certificate from the Mauritius Revenue Authority and hence, subject to fulfilling the requirements under the Indian Income Tax Act, 1961 and other applicable laws, should be able to avail of the benefit of the India-Mauritius Double Tax Avoidance Treaty (Mauritius Treaty), and other treaties as appropriate. As a Mauritian tax resident, the Fund under the Mauritius Treaty ought to be entitled to receive from India, distribution proceeds from the disposal of Indian securities without being subject to payment of any capital gains tax in India…The key advantage of the application of the Mauritius Treaty to the Fund is that no Indian or Mauritian tax will be imposed on any gain recognized by the Company upon the sale of its equity interests in the Indian companies…”
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Responding to a questionnaire from The Indian Express, Tom Conroy, Director, Office of Public Affairs and Communications, Yale University, stated: “Beyond its own publications, the university does not share information about investments.”