No illicit transactions with Srei Group: Trinity Alternative Investments

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Trinity Alternative Investment Managers, majority-owned by Srei Infra Finance which is the subject of RBI-mandated insolvency proceedings, said no illicit transactions had been made with any Srei group entity. Trinity also said that none of the existing rules define related party transactions with respect to alternative investment funds and that the Srei Group, although it owns 51% of the capital, has no representation in the board of directors since the entity is only an asset manager.

Last week, reports said RBI-appointed administrator Rajneesh Sharma moved the Kolkata bench from the National Company Law Tribunal (NCLT) seeking to include around Rs.8,400 crore as the group’s entities Srei have granted 20 of the 50 companies owned by Trinity, as part of the ongoing insolvency proceedings.
The director also sought to block a planned rights offering by Trinity because Srei being in insolvency proceedings cannot participate as this will lead the company to become a minority shareholder.

On October 4, 2021, the Reserve Bank of India replaced the boards of directors of the group companies, Srei Infra Finance and Srei Equipment Finance. The companies were later referred to the NCLT for insolvency proceedings.
The Srei Group launched Trinity as a registered AIF by Sebi in 2005 and in mid-2020 sold 49% of the capital to Singaporean fund Payaash Capital. As an asset manager, Trinity manages around Rs 1,475 crore, which is invested between around fifty companies.

Payaash Capital is represented at Trinity by Uttam Prakash Agarwal, former President of ICAI. He was also a member of the board of directors of Yes Bank and had also conducted a detailed audit on the Satyam Computer scam in 2009.
Speaking to PTI, Agarwal denied any wrongdoing as established and claimed that there had been no illicit transactions between the fund and the Srei group entities. “I have asked Trinity and the board to share any information the administrator is looking for,” he said.
Stating that there are absolutely no related party transactions between the Srei group entities and Trinity and its investee companies, Agarwal said that one of the key conditions that Payaash Capital insisted on was to have a board independent administration. This is the reason why the Srei group has chosen to remain outside the board of directors despite being the majority shareholder, he added.

“None of the existing statutory provisions, be it the Companies Act or the Income Tax Act, or the Sebi Rules define what a related party transaction in an AIF is. therefore nothing more than absurd.

In addition, after the administrator asked for details, we (Payaash Capital) appointed an auditor to study the position of the investment, ”he said, adding that accusing Trinity or its shareholder of the transaction monetary illicit between the issuing companies and the promoters amounts to accusing a bank. led the mutual fund to act in concert with the bank to grant loans to the companies to which it is exposed.

On the rights issue, Agarwal said the plan had already been scrapped because shareholders didn’t want it and NCLT to admit the petition makes no sense.

Since its inception in 2005, Trinity has invested around Rs 8,000 crore and has returned over Rs 5,500 crore to its investors.

Currently, he manages 10 funds with a total of Rs 1,475 crore equity exposure of around 50 entities holding assets such as toll roads, real estate, power distribution and generation, and water supply. . Of the current corpus, Rs 100 crore is provided by Srei, Shilpa Modi, who heads Trinity as senior vice president, said.

The administrator alleged that the Srei entities loaned Rs.8,400 crore to these companies and that in some of them the Srei promoting entities have an economic interest.

In addition, some of Trinity’s funds have raised funds by issuing shares to Srei companies. These interconnected transactions make Trinity an important part in resolving Srei companies, according to the administrator.
Administrator Rajneesh Sharma could not be reached for comment.

Modi told PTI that the Srei Group has used Payaash Capital to expand operations and raise capital overseas by investing in infra / stressed assets and also as part of its fund exit offering.

When asked why Srei was not on the board, she replied that it was to ensure transparency and global best practices and to make it operate independently. This was also done to avoid a possible conflict of interest with investors. As a result, none of the issuing companies have any ties to Trinity or Srei in any way, she claimed.

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