SSG in battle over a shady Lehman deal; Orix may opt to pick IL&FS renewables assets
SSG Capital Management and Canadian financial services company Kyko Global are battling it out in a Hong Kong court over an investment by Lehman Brothers in an Indian infotech firm, CNBCTV18 reported.
Hong Kong-based SSG’s founders have been summoned by the court over missing funds related to a multi-million dollar fraud committed in the United States by Hyderabad-based Prithvi Information Solutions Ltd (PISL).
The court has been moved by Kyko Global, a Canadian financial services company, which is seeking damages worth $100.73 million from PISL over a fraud. The damages were awarded by a US court.
Kyko believes it can recover money from PISL through SSG, because the Canadian firm has found that the Hong Kong firm and its unit owe $22.9 million to the infotech company, thanks to a series of transactions executed by these entities. This money has its origins in a $50-million investment by Lehman Brothers in the Hyderabad firm in February 2007, CNBCTV18 reported.
SSG founders Shyam Maheshwari, Andreas Vourloumis, and Wong Ching Him aka Edwin Wong were instrumental in the 2007 investment in PISL as then executives of Lehman Brothers, CNBCTV18 reported, citing documents.
Separately, Japanese financial services group Orix Corp will not sell its stake in the renewable energy business of debt-laden IL&FS at a valuation below Rs 2,300 crore, people in the know told The Times of India.
Orix, the second-largest shareholder of IL&FS, may do so by exercising its right of first refusal, a contractual right, but not obligation, to enter into a business transaction with a person or company before anyone else can, going by Investopedia. In 2016, Orix had spent Rs 2,300 crore for a 49% stake in the renewable energy business, which IL&FS is now selling to pare its Rs 91,000-crore debt.
Shadow banking firm IL&FS has wind energy capacity of 875 megawatt and some solar projects.
Meanwhile, people in the know told The Economic Times that the central government has reversed the plan of REC (formerly Rural Electrification Corp.) taking over Power Finance Corp. (PFC), and has suggested that PFC should acquire REC instead for ₹14,000 crore.
The Union Cabinet may consider the proposal today, the people mentioned above said.
The government owns 58% stake in REC and 66% holding in PFC. As against the central bank guidelines of 15% capital adequacy ratio for non-banking financial companies, the multiple for PFC is 17.7% and REC 16.7%.