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Last Updated : Jul 31, 2019 11:30 AM IST | Source:

VG Siddhartha’s letter: Which investor’s ‘pressure’ was Coffee Day owner referring to?

Siddhartha said that he had to borrow a large sum of money from a friend to partially buy back shares.

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In his letter to shareholders, VG Siddhartha mentioned tremendous pressure from one of the private equity partners and lenders had led to liquidity crunch and made him “succumb to the situation”. The CCD founder has been missing since July 29 evening.

He was referring to two situations – a private equity partner forcing him to buy back shares and trouble from income tax that blocked him from selling Mindtree shares amid the takeover battle that ensued between Mindtree and L&T.

Siddhartha said that he had to borrow a large sum of money from a friend to partially buy back shares. Since 2017, Siddhartha has been in trouble from the Income Tax Returns department, which had attached 4.5 percent Mindtree stake to cover any tax liabilities prior to stake sale to L&T.


All these led to a liquidity crunch, according to him.

Also read: Congress' DK Shivakumar says the CCD founder called on July 28

Siddhartha recently sold his 20.4 percent stake in Mindtree to L&T for Rs 3,000 crore in a bid to cover this debt that accounted for about Rs 3,300 crore.

Also read: 'I have failed as an entrepreneur,' says Cafe Coffee Day owner in letter to staff

Siddhartha is a majority shareholder of his Coffee Day Enterprise at 32.75 percent. The total promoter shareholding in his enterprise is close to 53.93 percent.

The largest private equity shareholders include NLS Mauritius LLC, KKR Mauritius PE investments II Ltd and Marina West (Singapore) Pte. Ltd holding 10.61 percent, 6.07 percent and 4.63 percent. Marina Iii (Singapore) Pte. Ltd has a shareholding of 1.04 percent.

Overseas corporate bodies have 22.35 percent.

Nandan Nilekani, co-founder – Infosys, has a 2.69 percent stake in Siddhartha’s coffee empire, which is the largest one for an individual stakeholder. The connection between Nilekani and Siddhartha goes way back. According to reports, Siddhartha was one of the first backers of Infosys, when it went for IPO in 1993.

A spokesperson of investment firm KKR has said, “We have seen the statement that Coffee Day Enterprises has made to the stock exchanges. We are deeply saddened by the developments and our thoughts are with his family at this time. We believe in VG Siddhartha and had invested in the company about nine years ago. We sold approximately 4.25 percent (of our total holding of approximately 10.3 percent in the company) in February, 2018 on the stock exchange and have not sold any shares before or after.”

Ranjan Pai, Chairman – Manipal Group, said to Moneycontrol, “I am shocked to hear about the news. He is an amazing person and a fantastic entrepreneur, someone I always thought very highly of. I am still hoping for a miracle.”

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First Published on Jul 30, 2019 12:38 pm
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