Bain, TPG told to give Lilliput founder first refusal on shares

The private equity firms between then invested $86 million in Lilliput last year. Last month, Narula took legal action, by saying that the two investors were trying to hinder the company's INR8.5 billion IPO and take a majority stake. Bain and TPG responded that they had asked for an investigation into Lilliput's accounts, having received anonymous tip-offs about financial impropriety.

Narula obtained a court injunction that prevents Bain and TPG from selling their stakes or discussing the matter publicly. Then on Wednesday the court directed Narula and the private equity firms not to act against the board resolution passed on September 28, which requires a re-audit of the company's accounts. It also asked them to put forward names to be considered for the positions of auditor and arbitrator, The Economic Times reported.

It was reported late last month that Lilliput was seeking an out-of-court settlement with Bain and TPG, although it had yet to open discussions on the matter.

Corporate governance has become a concern for private equity investors in India, much as it has their China-focused counterparts. ICICI Venture Funds Management wrote off part of its investment in discount retailer Subhiksha Trading Services following concerns over lapses in corporate governance - which resulted in a court case - as well as over its financial health.

In July, Multiple Alternate Asset Management, Mount Kellett Capital Partners and Wolfensohn Capital Partners called off an investment in Dhanlaxmi Bank amid claims of accounting irregularities. The bank denies the allegations.

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• Topics
• South Asia
• Regulation
• Exits
• India
• regulation
• Bain Capital Asia
• TPG Capital
• Exit