Letter puts focus on high risk nature of capital from PES

MUMBAI: A letter, purportedly written by Cafe Coffee Day (CCD) promoter VG Siddhartha, citing pressure from a private equity (PE) partner to buy back shares, has brought back the focus on the high risk nature of the capital that private investors provide.

CCD counts global PE firm KKR, Standard Chartered PE (now known as Affirma Capital) and New Silk Route (NSR) as its investors.

A spokesperson for Standard Chartered PE said, “We backed VG Siddhartha in early 2010 and have had a great relationship with him throughout. We sold approximately 1% equity on the exchange in April 2018. Since then, we haven’t sold anything and currently own approx 5.7% in CDEL (Coffee Day Enterprise Ltd).” A spokesperson for NSR could not be immediately reached. “We have seen the statement that Coffee Day Enterprises has made to the stock exchanges. We are deeply saddened by the developments and our thoughts are with his family at this time. We believe in VG Siddhartha and had invested in the company about nine years ago. We sold approximately 4.25% (of our total holding of approximately 10.3% in the company) in February, 2018 on the stock exchange and have not sold any shares before or after,” PE firm KKR said in a statement. PE and venture capital investors typically invest with return expectations of well over 20% internal rate of return and demand board representations, strong rights and oversight over the company’s financial and other operations.