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In Mauritius papers, a real estate fund that never took off

Ritu Sarin
Records show a bill for $15,271 raised in the name of KPDL on December 16, 2010, on the subject of advice in connection with the setting up of a Mauritius CLOs (collateralized loan obligations)/professional Mauritius services.

One significant India-linked infrastructure proposal for which Mauritius firm Conyers Dill & Pearman played key legal adviser was between Pune-based builder Kolte Patil Developers Limited (KPDL) and Portman Holdings LLC, a US-based real estate investment and development company which has been active in India since 1996.

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There are a large number of framework agreements and proposals for formation of a mega real estate fund which are part of the Conyers Dill & Pearman data with most of them from 2010, the year the joint venture between the two real estate companies was announced. Records investigated by The Indian Express show several agreements for the Fund and bills raised by Conyers (Mauritius) in the name of KPDL for legal work. But Kolte Patil Developers Limited said it had not raised and/or invested any amount through/in any such offshore Fund or any India Real Estate Fund set up in Mauritius.

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In a response to The Indian Express, KPDL s Group CEO Gopal Sarda stated: You may have retrieved some preliminary documents on the then proposed fund which never took off. We were in talks during 2010 and might have prepared a conceptual document but no definitive agreement has been signed and proposed fund never took off and lapsed on a time-bound basis. Neither /nor KPDL had raised and/or invested any amount through /in any India Real Estate Fund set up in Mauritius. Similarly, Portman Holdings also clarified that no money was invested by either company in a Mauritius-based Fund.

It was in August 2010 that Conyers told Portman that its understanding was that we would be involved in the formation of a closed-end investment fund (the Fund ) and investment management entity (the Investment Manager ) in Mauritius, as well as potentially a number of Mauritius domiciled investment holding companies.

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Records show that Conyers put on record that because the Indian sponsor (KPDL) is unable to invest at the Mauritius level, they will enter into a co-investment agreement… According to this, KPDL will set up an Investment Vehicle in India wholly owned by them. The 2010 agreement notes that the Fund Company and the Investment Vehicle will, in turn, enter into a Co-Investment Agreement which will be established in a manner that will be tax efficient with respect to Indian and Mauritius tax laws…

The data contains a 2010 presentation on the India Real Estate Fund with a pitch for raising $200 million. The two companies were to collectively invest $20 million in the Fund with the aim of a partnership in nine to 12 real estate projects in urban locations including Pune, Mumbai, Bangalore and New Delhi NCR. The focus of the Fund was primarily to make investments in the mid-segment residential development across six metro cities, beginning with Pune.

Significantly, the presentation outlines how at least 75 per cent of the Fund was to be invested in residential developments with the balance being opportunistic. The cost for each real estate project in which the Fund would invest was pegged to be in the range of $40-$100 million.

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Kolte Patil Developers has referred to its partnership with Portman Holdings time to time but not the Fund or its association with Conyers. Records show a bill for $15,271 raised in the name of KPDL on December 16, 2010, on the subject of advice in connection with the setting up of a Mauritius CLOs (collateralized loan obligations)/professional Mauritius services. Interestingly, Conyers also prepared a 16-page note for the two companies listing all the risk factors for the proposed fund including a possible amendment in the Indo-Mauritius DTTA (Double Taxation Avoidance Agreement, which eventually did take place in May 2016).

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It was in 2009, that KPDL announced its first joint venture with the Houston-based developer which they stated was for Rs 275 crore. Their website announces their partnership with Portman Holdings for Tuscan Real Estate Limited and described it as an SPV in which they held 51 per cent equity and Portman Holdings held the rest 49 per cent. Tuscan Estate is a 900,000 sq feet residential colony located in Pune. The next project for the two companies was Margosa Heights, also in Pune, and in September 2016, KPDL announced it had completed the project generating an internal rate of return of 36 per cent and a money multiple of 3.1 times for Portman Holdings and themselves.