ED Hits Se­quoia Again, Grills MD in Vasan Probe

Agency prob­ing why Vasan shares were bought at ‘high price’

The Economic Times - - Front Page - Rahul.Tri­pathi@ times­group.com

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.

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