Two Mauritius based investors—LTS Investment Fund and Vikasa India EIF I Fund—hold the key to the success of Adani Group’s hostile takeover bid and open offer for NDTV, say experts. These funds together hold 14.17 percent stake in NDTV, making them the second largest shareholders after the news channel’s promoter Prannoy and Radhika Roy.

If these funds tender their stake in the open offer, which is highly anticipated by market experts, it would end the three-decade old dominance of the Roys over NDTV. Nearly 90 percent of LTS Investment’s ₹21,000 crore equity portfolio is dominated by a holding in Adani Group companies, which has led to speculation that the fund would favour Adani over the Roys.   

Adani requires stake higher than Roys

Currently, the Adani group has control over 29.18 percent stake (by the virtue of convertible warrants) in NDTV and Roy’s own 32.27 percent in the news channel directly. The Roys are still fighting tooth and nail to control NDTV, which means that for Adani Group to establish its dominance over the channel, it would require a stake significantly higher than Roy’s.

Experts say that if one goes by the history of open offers and general market trend, the retail investors are largely unlikely to tender their shares in the offer where they see higher gains potentially since the incoming promoter is financially stronger than the old hands. General public, corporate bodies and funds own nearly 25 percent stake in NDTV apart from the holdings of the Roys, Adani and the two tax haven based funds. 

Hence, even if the Roys and public shareholders (with nearly 25 percent stake in NDTV) do not participate fully in the open offer, Adani can still achieve dominance with the help of the Mauritius investors, experts say.

The open offer came in August after Adani Group bought over Vishwapradhan Commercial , the company that had lent ₹403 crore to the Roys in lieu of convertible warrants. Adani then converted the warrants, to the tune of 29.18 percent equity stake in NDTV as per the terms of the loan agreement. Now the Roys, the founders of NDTV, are fighting tooth and nail to save their dominance over the channel.

Who are Mauritius Funds

Experts say the two Mauritius funds seem more like holding vehicles for some large investors and both of them put together had acquired the exact same amount of stake in NDTV that was once held by Oswal Greentech, a company belonging to Abhay Oswal, father-in-law to Navin Jindal. In September 2016, after Oswal’s death in Russia, the exact same amount of shares held by Oswal Greentech came to be held by LTS and Eriska Investments, another Mauritius registered fund. While LTS has retained its 9.75 percent stake till date, Eriska passed it on to Vikasa. True to their nature as just holding vehicles, the two funds have never raised any issues or registered their voices when shareholding related controversies surrounded NDTV, experts say.