Lilliput seeks out-of-court settlement with Bain, TPG

Bain and TPG accused Sanjeev Narula, Lilliput's founder, of accounting improprieties and Narula countered by saying that the two investors were trying to hinder the company's INR8.5 billion IPO and take a majority stake. The IPO has since been put on indefinite hold.

An executive at the New Delhi-based company told The Wall Street Journal that, although settlement possibilities are being examined, discussions with the investors have yet to take place. The executive added that Lilliput is willing to have its accounts independently audited with a view to replacing Bain and TPG with new investors.

Lilliput last year received $60 million and $26 million from Bain and TPG, respectively, and filed for an IPO in Mumbai. Then the private equity firms received an anonymous tip-off that led them to question the company's audited financial statements. It was reported last week that India's Ministry of Corporate Affairs is investigating the role of Ernst & Young (E&Y) and its member firms in the alleged accounting problems at Lilliput Kidswear. It wants to establish if there was any conflict of interest.

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
• Consumer
• Exits
• Bain Capital Asia
• TPG Capital
• India
• Growth capital
• IPO
• regulation