Hedge funds trapped in alleged $1.5 bn Ireo fraud to pick Varde as manager

Topics IREO Management

Buildings in the skyline
Foreign investors who backed an Indian real estate venture and now say they were victims of a $1.5 billion fraud are planning to appoint a new manager for the private equity style operation, the latest development in a more than decade-long saga.

Investors like Dinakar Singh’s Axon Capital and Chris Hohn’s Children’s Investment Fund Foundation are negotiating to replace the management of Ireo with private equity firm Varde Partners LP, people with knowledge of the discussions said. The consensual deal would see Varde take over the management of the company’s investments and develop its real estate projects, the people said, asking not to be identified as the negotiations are confidential.

The terms of the existing management’s exit and Varde’s appointment aren’t finalised and there’s no certainty that a deal will be completed, the people said. Representatives for Axon, Children’s Investment Fund Foundation, Varde, and Ireo’s current management declined to comment.

The change would cap a drawn out dispute that was dragged into the spotlight in 2018 when the investors accused Ireo’s bosses of defrauding them, leading to a bitter legal battle. Ireo has denied the allegations. It comes at a time when India is attracting increasing attention from some of the world’s biggest real estate investors including Blackstone Group Inc. and Brookfield Asset Management Inc.

Ireo was founded in 2004 by Indian businessman Lalit Goyal, who remains in charge, together with Anurag Bhargava, the former head of private equity at Michael Dell’s MSD Capital, and former Colony Capital Inc. analyst Louis Klein. Klein, former Goldman Sachs Group Inc. partner Steven Wisch and the company’s ex-Chief Executive Officer Ramesh Sanka have all since left Ireo.

Ireo’s assets include an office and residential development project in India’s National Capital Region around Delhi.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel