Ahuja was one of the first to make a private equity bet in the Adani Groupwhile at 3i Infrastructure, which he joined in 2005. In 2007, 3i made the first investment from its Indian infrastructure fund, paying $227 million (Rs 897 crore at the time) for an undisclosed stake in Adani Power Ltd, then a wholly-owned subsidiary of flagship firm Adani Enterprises Ltd. According to a TOI report, with Adani Power’s enterprise value pegged at Rs 10,850 crore, 3i’s shareholding in Adani Power amounted to around 8%. This was 3i’s largest transaction in India since it began investing in the country in mid-2005. It held the shares for over seven years. When it sold a 2% block in the company in 2014, VC Circle estimated a loss of 25-30% in sterling terms (40% in dollar terms) largely due to the sharp depreciation of the Indian currency. Ahuja left 3i in 2013 and joined IPE Plus Advisors in January 2014.
Read more: Madhabi Buch made revelations, investors should read Hindenburg disclaimer: Sebi
The Adani Power investment, according to people in the private equity sector, was one of many failures that eventually led 3i, a London-listed company co-owned by the eponymous British private equity group, to stop investing in India in 2013, following a period of volatility and poor returns. Of the $875 million the fund invested in seven investments in India from its $1.2 billion 3i India Fund under Ahuja’s watch, it failed to exit any investment in six years. Adani Power was the only holding listed on Indian bourses in 2009, but the value of 3i’s stake in the company, bought for $227 million in 2007, fell by about $85 million, according to ET calculations from that period.
As of March 2013, the fund’s Indian investments were valued at about 80% of their cost in dollar terms, 3i said in an official statement in May 2013. In a report in the same month on 3i’s change in investment thesis, the Financial Times quoted Iain Scouller, an analyst at Oriel Securities, as saying that “the main negative appears to have been the Adani Power share price and the weakness of the Indian rupee against sterling, with an unrealised loss of £26.3m on the Indian portfolio. The European portfolio performed much better, with an unrealised gain of £51m.”
That same year, Ahuja left the company after working there for about eight years, according to a former colleague who knew him well from his earlier stint as a Citi banker. Ahuja said he does not remember the details of those investments because they were “a long time ago,” adding: “I got a call to retire when I turned 50 and I did. The exit from Adani Power must have happened after I left 3i.” Read more: Money invested in IPE-Plus Childhood Friendship Fund did not reach Adani: Sebi chief Madhabi Buch
A blast from the past
Hindenburg’s latest report comes nearly a decade after its earlier investments in Indian power plants, highways and utilities came under scrutiny following massive writedowns. Ahuja is also a former director of two Adani Group companies.
“I have been teaching underprivileged children for the past six years,” Ahuja told ET from Singapore, where he currently resides, adding that he is also engaged in the study of religious scriptures. “These allegations came like a bolt from the blue.”
This represents a shift from the image of Ahuja that several of his peers, colleagues and portfolio managers gave to ET: that of a banker turned aggressive private equity boss with a penchant for Maserati sports cars.
Hindenburg claims that the IPE Plus Fund was set up by Ahuja through wealth management firm India Infoline (IIFL). According to the American short-seller, Sebi chief Madhabi Puri Buch and her husband Dhaval Buch had invested in this fund in June 2015, which was also tapped by Vinod Adani, brother of billionaire businessman Gautam Adani. At the end of December 2017, the IPE Plus Fund had just $38.43 million in assets under management (AUM), according to IIFL disclosures. Buch and her husband said they stepped down from the fund when Ahuja left in 2018.
Interestingly, Buch joined the Indian Institute of Management, Ahmedabad the same year Ahuja graduated – in 1986. Ahuja’s wife, Latika Monga Ahuja, also graduated from the same business school and, according to her LinkedIn profile, is a director of Piramal Asset Management Pte Ltd, Singapore.
“Apart from being used as an alleged funnel for Vinod Adani’s money,” the fund and its CIO also had close ties to the Adani Group, Hindenburg said in the report released Saturday. “Concurrently, Ahuja was a director of Adani Enterprises, where he served three terms spanning nine years and ending in June 2017, according to his biography and stock exchange disclosures. Prior to that, he was also a nominee director at Adani Power.”
Ahuja rejected the conclusions of the Hindenburg report.
“I have been in the highest echelons of international finance for three decades,” he said. “The question of being on the board of directors of Adani Group companies and investing even a penny in them is not even raised. It is a case of insider trading. Hindenburg is clutching at straws.”
While stressing that at no point of time had IPE or Ahuja invested in bonds, stocks or derivatives of any Adani Group company, the Buch family, in a detailed statement, said, “The decision to invest in this fund was because the Chief Investment Officer, Anil Ahuja, is a childhood friend of Dhaval from school and IIT Delhi and being an ex-employee of Citibank, JP Morgan and 3i Group Plc, had many decades of a strong career as an investor. That these were the drivers of the investment decision is confirmed by the fact that when, in 2018, Mr. Ahuja left his position as Chief Investment Officer of the fund, we redeemed the investment in that fund.”
The Adani Group, in a statement to the bourses on Sunday, also said: “Anil Ahuja was a Nominee Director of 3i Investment Fund at Adani Power (2007-2008) and later a Director of Adani Enterprises till 2017… The Adani Group has absolutely no business relationship with the persons or matters mentioned in this calculated deliberate effort to malign our reputation.”
Banker, Investor
After IIM-A, both Ahuja and his wife joined Citi in the late 1980s. He worked in transaction services and his wife in corporate banking, rising through the ranks before she joined Citibank Venture Capital India (CVCI). He went on to become the officer in charge of the transaction banking vertical. Veterans of the organisation recall that around the same time, the Wall Street bank had set up a software and technology services company. All Citi employees, including junior and administrative employees, were given shares in Citicorp Information Technology Industries Ltd. (CITIL) on preferential terms. A few years later, when the bank was under financial pressure, it transferred its shares in CITIL to CVCI at a discount “to show profits”. By then, Latika Ahuja was already with CVCI.
CITIL, under the name CVCI, became Iflex Solutions and eventually went public. “Prior to the IPO, Ahuja and other senior Citi executives had accumulated a large chunk of the company’s stock by buying it at a discount from colleagues who had no other liquidity options,” said a former Citi colleague who did not want to be identified. At one point, the Ahujas were among the largest individual shareholders of Iflex, which was subsequently bought by Oracle in 2005. Citi’s $400,000 investment led to a windfall payout after Citi sold its 42% stake for $592 million.
“Ahuja was known for his intelligence and aggressive bets both at Citi and later in his private sector stints with JP Morgan and 3i. Some worked, many didn’t,” said a former private sector colleague who did not want to be identified.
IPE Plus Fund is currently trading as 360 One Wam Ltd. On Sunday, the company said that “IPE Plus Fund 1 did not make any investments in any equity of the Adani Group, either directly or indirectly” during its tenure in the six years to October 2019.
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