ED Hits Sequoia Again, Grills MD in Vasan Probe
Agency probing why Vasan shares were bought at ‘high price’
New Delhi: Sequoia Capital’s Managing Director VT Bharadwaj is being questioned by the Enforcement Directorate in Delhi. The questioning comes a week after the agency raided Sequoia’s offices in Mumbai and Bengaluru. Sequoia is under ED’s scanner in connection with the agency’s investigation into Vasan Healthcare. Sequoia had invested in Vasan in 2009.
Directorate officials told ET that Bharadwaj was asked about Sequoia’s purchase of compulsorily convertible preference shares (CCPS) from Vasan. A Closer Look
ED says the Vasan probe is linked to Aircel-Maxis inquiry. But Sequoia has denied links to Aircel-Maxis ON APRIL 18, ED CONDUCTED RAIDS AT SEQUOIA OFFICES
Probe related to Sequoia’s investment in Vasan Healthcare in 2009
ED questioning Sequoia MD VT Bharadwaj, who quit Vasan board in Nov 2015
Sequoia invested in Vasan by purchasing compulsorily convertible preference shares
VC & investor communities said the action was unwarranted especially when a firm was cooperating with sleuths
Investigators are of the view that Vasan’s shares could have been bought at .₹ 110 per share at the time of the transaction, but that Sequoia paid .₹ 7,500 per share and spent around .₹ 112 crore.
Questions sent to Sequoia did not elicit any response.
Last week, the firm had issued a statement, which said: “Sequoia has adopted a policy of full compliance with that investigation and has dutifully responded to governmental inquiries recd (sic) to date. We continue to cooperate with the ongoing investigation on Vasan.” The firm also said it was a minority investor in Vasan.
The Vasan investigation, ED claims, is linked to its larger probe into the AircelMaxis deal. But Sequoia has denied any links with the Aircel-Maxis deal.
India’s venture capital and investor/entrepreneurial communities have expressed disquiet over ED’s actions against Sequoia, which has nearly a billion-dollar bet on new Indian businesses. Their argument was that such actions were unwarranted when a firm was fully cooperating with investigators. ED says Sequoia bought 30,000 shares of Vasan from Advantage Strategic Consulting Private Limited and 1,19,000 shares from one Dr M Arun.
“We have questioned officebearers of Sequoia on the urgency to buy shares at such a high rate (.`7,500 per share). We are looking at the reasons for this unusual transaction,” an ED official said.
Sequoia had earlier said that Bharadwaj had resigned from Vasan’s board in November 2015 and that he, as a Vasan board member, had sought investigations into alleged irregularities in the company.
ED officials said the value of Vasan shares bought by Sequoia dropped and that this was another fact being closely looked into.