PEs: Saddened by CCD boss' missing

Two leading foreign PEs --KKR and Standard Chartered PE which together own close to 12 percent in Caf Coffee Day--said they are "saddened" by the sudden disappearance of VG Siddhartha, the founder-chairman of the country's largest coffee chain, and that they enjoyed a "great relationship" with him.

The role of private equity funds has been under a cloud after a letter purportedly written by Siddhartha on July 27 accused a PE fund to buy back shares. Buyout major KKR and Standard Chartered Private Equity said they had invested in the Bangalore company nine years ago and part-exited from the investments last year.

In statements issued separately, KKR said it holds a little over 6 percent of the company after selling 4.25 percent last year, while StanC said it owns 5.7 percent in Coffee Day Enterprises.

"We are deeply saddened by the developments and our thoughts are with his family. We believed in Siddhartha and had invested in the company about nine years ago," a KKR statement said.

The spokesperson of StanC PE said the fund enjoyed a "great relationship" throughout its investment. It can be noted that typically, PE funds have a lower horizon of investments ranging from one to seven years, during which time they help an investee company grow and make money on an exit. But most PE investments turn bad and only a few make good exits.

In the purported letter, Siddhartha blames one of the partners of a private equity investor without naming anyone.

"...I gave up as I could not take any more pressure from one of the private equity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend," the by him letter reads.

It can be noted that share buyback is a widely followed practice wherein promoters arrange money to bail out a fund house, which might be in pressure from its investors called as limited partners.

Spokespersons for both KKR and SCPE said they sold the stakes amounting to 4.25 percent and 1 percent, respectively, on the open exchange in the part-exit transactions that happened in 2018.

Meanwhile, mortgage major HDFC denied it has any exposure to any of the companies associated with Siddhartha.

"HDFC had disbursed lease rental discounting loans to Tanglin Developments (Coffee Day Enterprise) for its project Global Village Tech Park in Bangalore. The entire loan was repaid in January 2019. Currently, it has no exposure to the Coffee Day Enterprises group," HDFC said in a statement.

With over 1800 outlets, CCD is the country's biggest coffee chain and Siddhartha's family owns the largest individual coffee plantation sprawling over 15,000 acres. The 58-year-old Siddhartha was reported missing mysteriously since Monday night when he was en route to Mangaluru. He was last seen on the Ullal bridge over the Netravati that's is spate and a massive search operation is underway. But so far he could not be traced.