Mumbai police summon top Baring PE officials

Singapore-based Global Schools Foundation, which runs schools across Asia, has alleged that its private equity (PE) investor Baring Private Equity Asia has caused a loss of Rs 65 crore to the company.

Written by Khushboo Narayan | Mumbai | Published: May 16, 2015 2:33:19 am
economic offences wing, Mumbai police, Hong Kong-based private equity firm, Baring Private Equity Asia, Global Schools Foundation Ltd, S Jayakumar, NM Joshi Marg, Baring Private Equity Asia, Kosmas Kalliarekos, Shubhada Pradeep Chavan, Minerva Education Holdings Ltd, mumbai news, bombay news, maharashtra news, india news, nation news, news At that time, Baring Private Equity had said Global Schools Foundation’s complaint was unfounded.

The economic offences wing (EOW) of the Mumbai police has summoned two top officials of Hong Kong-based private equity firm Baring Private Equity Asia in connection with a first information report filed by Global Schools Foundation Ltd, said S Jayakumar, Deputy Commissioner of Police, Zone III.

The NM Joshi Marg police station issued the summons on Thursday, 14 May, 2015, to Jean Eric Salata, chief executive of Baring Private Equity Asia, and  Kosmas Kalliarekos, managing director, directing them to be present “within a week with relevant documents” before police inspector Shubhada Pradeep Chavan.

“We have summoned the two officers for investigation,” said Jayakumar.

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Singapore-based Global Schools Foundation, which runs schools across Asia, has alleged that its private equity (PE) investor Baring Private Equity Asia has caused a loss of Rs 65 crore to the company. The FIR was filed with the EOW in October 2014.

At that time, Baring Private Equity had said Global Schools Foundation’s complaint was unfounded. The two parties are also engaged in an arbitration over the dispute in Singapore. Global Schools Foundation in its 25 August, 2014, complaint to the EOW has said that Baring Private Equity held the company back from a series of profitable acquisitions of schools in Abu Dhabi, Kuwait and Vietnam. The company also said that Baring Private equity did so with the intention of taking control of the company on the basis of an agreement that linked the PE fund’s shareholding in Global Schools Foundation to the company’s profits.

In 2011, Baring Private Equity, one of the largest private equity firms, through its investment arm Minerva Education Holdings Ltd, invested US $25 million in Global Indian School Holdings in the form of convertible note, said the complaint filed by Global Schools Foundation.

According to the agreement, the convertible note was a debt instrument to be converted into equity after five years or at the time of exit of the fund. Baring Private Equity Asia had agreed to invest up to US $75 million in three tranches. The convertible note also provided that if Global Indian School “failed to achieve a particular profit target in the year 2012, then the conversion formula would significantly trim down, facilitating the note holder in acquiring equity shares” of the company at a discounted price. The shareholder agreement included clauses for the veto rights of Minerva Education, including the right to veto any investment by Global Schools Foundation above $1 million.

Baring Private Equity Asia has moved the Bombay High Court for quashing of the FIR filed by Global Schools Foundation. The case is pending in court and will come up for hearing in June.

A spokesperson for Baring Private Equity said, “Neither Mr Salata nor Mr Kalliarekos received any summons from the Economic Offences Wing of the Mumbai Police. The complaint filed with the Mumbai Police is frivolous and baseless. However, Baring Private Equity Asia intends to fully cooperate with the police in its ongoing investigation. The matter is currently subjudice before the Mumbai High Court. Baring Private Equity Asia is therefore unable to offer further comment at this point.”

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