Nirav Modi, the prime accused in the $2 billion fraud at Punjab National Bank, had hired PwC India, Moelis & Co., IDFC Bank and Jefferies to help a group company go public, three people aware of Modi’s fundraising plans said.
While Modi’s plan to tap the public markets to raise Rs1,500 crore for his diamond businesses was known, the fact that he had hired bankers for the same indicates that the IPO process was at an advanced stage.
Mint could not ascertain the name of the company that was to go public.
PwC India was hired as the restructuring adviser for the Nirav Modi group while Moelis & Co., headed by former UBS executive Manisha Girotra in India, was appointed as the adviser for corporate structure and governance.
IDFC Bank along with Jefferies India were hired to manage the share sale.
“In 2017, we were engaged by Firestar International Ltd (FIPL) and Firestar Diamond International Pvt. Ltd (FDIPL) to advise on tax/regulatory implications in connection with their segregation of retail business and manufacturing facility as well as readiness for a future IPO," a spokesperson for PwC India said confirming the developments. “We are not aware of the exact plan and timing of the IPO."
A spokesperson for Moelis and Co. in New York declined to comment. New York-based Moelis hit the headlines in 2017 after it was chosen as the sole independent adviser for the planned listing of Saudi Aramco, dubbed as the biggest IPO ever by issue size.
Emails requesting comments sent to both IDFC Bank and Jefferies remained unanswered until press time.
“Under Issue of Capital and Disclosure Requirements (ICDR) regulations, merchant banks are required to do an independent verification of companies to ensure that all necessary disclosures are made prior to the IPO," said Sumit Agarwal, founding Partner at Suvan Law Advisors, which specializes in securities law.
“In such cases, merchant banks often rely on data and facts certified by the company and their own assessment."
FIPL, the flagship company of Nirav Modi, is based in Mumbai and operates in global diamond markets of Hong Kong, the UAE and the US, and has offices in New York, Hong Kong, Antwerp and Dubai. Its manufacturing units are located in Mumbai, Surat, Jaipur, Moscow, Armenia and South Africa.
According to FIPL’s auditors cited in recent credit rating reports, there were no defaults on bank dues and no material fraud by the company or by its officers in FY16 and FY17.
According to recent corporate filings, FIPL’s total adjusted consolidated debt stood close to Rs4,000 crore which included contingent liabilities in the standalone financials relating to the guaranteed debt of subsidiaries. FIPL’s consolidated revenue was Rs14,700 crore in FY17 was up from Rs12,500 crore with an Ebitda of Rs788 crore, according to a India Ratings and research report. The rating agency, however, downgraded the company’s credit rating once the fraud came to light earlier this month.