Accion Diversified Fund awaits returns from its NuPower investment

While raising funds from Indian banks, NuPower Renewables had said its ‘marquee’ equity investor — Accion Diversified Strategies Fund (ADSF) is a private equity fund with a corpus of $250 million with investments all over the world. NuPower Renewables is the only India-based investment of ADSF, which has shown its address in Cayman Island, a tax haven. NuPower is currently facing investigation by the government agencies.

ADSF invested Rs 3.98 billion in NuPower Renewables, which is now equal to an equity stake of 55 per cent in the company following conversion of preference shares. The rest of the stake in NuPower is owned by Deepak Kochhar, husband of ICICI Bank MD & CEO, Chanda Kochhar.

The fund has not received any returns till date as NuPower Renewables made losses of Rs 73.1 million on revenues of Rs 2.10 billion in fiscal 2016-17 as compared to Rs 1 billion loss on Rs 1.63 billion revenues in the previous fiscal.

ADSF used two SPVs (special purpose vehicles) based in Mauritius – Firstland Holdings and DH Renewables Holdings (DHRH), to invest in NuPower. The investment in NuPower was first made by DH Renewables Holdings besides, it acquired convertible cumulative preference shares (CCPS) from Firstland Holdings in 2014.

Interestingly, a valuation report prepared by one of the top four audit firms in December 2016 had valued NuPower’s shares at Rs 1,161 a share. Based on this report, DHRH then converted its CCPS into equity shares in NuPower in March last year. Earlier, DHRH had converted its CCPS at a much higher rate of Rs 2,000 a share.

While raising funds from public sector banks like Central Bank of India, Canara Bank and private sector lender, Axis Bank, Nupower cited ADSF as a ‘marquee investor’, said a source close to the development.

NuPower Renewables has also told banks that ADSF has some 12 investments in Indonesia, Malaysia, China in diversified industries. NuPower did not give any information on who are the investors of the fund.

NuPower did not reply to an email query sent by this newspaper. An email sent to an address on Accion’s website did not elicit a response. Business Standard called on their Singapore office number, but these went unanswered.

“The Sebi sends us a KYC (know your customer) query for every investment made from all over the world in the Indian stock markets, but this investment was ignored for such a long time by the Indian regulators which is strange,” said a fund manager based in Singapore.

The Indian regulators are keen to find who are the actual owners of ADSF. NuPower is facing Central Bureau of Investigation (CBI) and the Income-tax department investigations following allegations of conflict of interest as Videocon had given a Rs 640 million loan to NuPower. NuPower Renewables, ICICI Bank board and Videocon have denied any quid pro quo.

A Videocon official said the Rs 640 million loan to NuPower will be returned with interest in 2021 as per initial contract. But, NuPower has said the loan will be converted into shares of the company.