Updated: December 17, 2020 7:25:10 am
This is the government’s second attempt to divest its stake in the airline after the previous move in 2018 ended without an offer.
LAXMI PRASAD PALAYPU, President of US-based Interups Inc, which has made a number of takeover offers through NCLT this year and recently filed an Expression of Interest in the divestment of Air India – says it plans to invest around $ 9 billion in the Indian aviation sector. However, scrutiny of the deals the company claims to “pursue” in India shows a spotty, if not poor record.
The information accessed from the Companies Registry shows that Palaypu has been a director in three companies. Two of them, Lakhi Investment Management Services and ISBN Securities Pvt Ltd, have already been removed.
The third, ISBN (India) Pvt Limited is still ‘active’, but assets put in charge of Rs 1.2 crore way back in 2010, continue to be so to date, according to RoC records. When asked about this, Palaypu told The Indian Express: “It’s something that recently came to our attention… My wife was the CEO and she signed the documents. She plans to come to India and we plan to settle with the bankers and close the case. “
In a regulatory filing with the SEC on August 7, 2020, Interups Inc had said that it was “ seeking ” nine deals in India (including the Air India acquisition) during the 12-month period ending in May 2021. There is no material investment the company has so far concluded in India and some of the deals it claims to be following have failed.
According to Palaypu, Interups, a shell company it acquired in 2016, manages the retirement accounts of more than 27,000 clients in the US, mostly NRIs. The company, according to Bloomberg, has a market capitalization of $ 27.6 million (about Rs 200 crore) as of Wednesday.
A chartered accountant, he worked at various audit firms in Hyderabad for nearly a decade, from 1986 to 1995, his LinkedIn profile shows. He moved to the United States in 1997 and sold insurance products at Prudential Financial. In 2002, he launched his own company IBSN Inc, and by 2007, he claims to have filed returns for 55 percent of the total population of Indian immigrant software professionals in the US.
Of the nine agreements that Interups claims to have in India, one involves the acquisition of 100 per cent of the shares of Asian Color Coated Ispat Ltd (ACCIL). However, in October 2019, NCLT approved the resolution plan presented by JSW Steel, thus practically closing this chapter for Interups.
A source close to ACCIL’s resolution process claimed that Interups did not appear to be serious. “He made an offer long after the expiration date and then expressed concern that they were never heard,” the source said. Palaypu accepted that they entered the bidding late. “We will appeal to the Supreme Court for an offer from ACCIL,” he said.
Another acquisition that the company claims to be ‘looking for’ but has failed is in real estate. In the SEC filing, the company said it has signed the terms to acquire two residential towers from the Phoenix Kessaku project in Bengaluru for Rs 528 crore. A source close to the development said that the agreement with Interups had already been terminated by Phoenix Mills Ltd. “While Interups signed the term sheet with Phoenix Mills to acquire the two towers, there were no changes in due diligence and timelines to bring CA, insurance agent, now Air India bidder; Palaypu has little to show in closing agreements, they were not fulfilled. After this, Phoenix Mills terminated the agreement in September, ”the source said.
Palaypu, however, said the price negotiations were still underway and that it was more of a financial structure issue: “We have not failed to complete due diligence… It is a structural issue. We can’t rush. “
Another deal that Interups has declared as ‘pursuing’ but has hit a roadblock relates to the purchase of 49% of AirAsia India’s share capital for and on behalf of its non-resident Indian clients. AirAsia India is a joint airline between Tata Sons and AirAsia Bhd of Malaysia and operates in India. The struggling AirAsia Bhd had reportedly agreed to sell its 49 percent stake, but the deal fell through because Tata Sons rejected the offer. The two partners have the first right to reject the other’s participation in the entity. Even when Interups claims that it is seeking the acquisition, and the Tata Group disagrees with the same, it is unlikely that the company will close the deal even with its president saying that he has stopped seeking it now.
In addition to Air India, some other deals that the company claims to pursue are the acquisition of Hotel Claridges, a 100% stake in Hotel Intercontinental, Mahabalipuram and a 51% stake in Viceroy Hotels. For the Claridges Hotel, Palaypu said he met with the hotel’s president, Suresh Nanda, on Nov. 22 and the deal was about to close.
The company is also seeking to acquire 100% of Reliance Naval & Engineering Company Ltd and has submitted its preliminary Expression of Interest. In addition, it has also submitted an offer to acquire Lavasa Corporation, a 10,800-acre city, which it intends to develop as an Educational City. In addition to these, the company is targeting some deals in the financial services and real estate industries.
However, all of these are still in the works and it remains to be seen if Interups can finally conclude any of them.
Globally, he claims to have invested in palm oil plantations in Malaysia (£ 120m), an integrated real estate project in Malaysia ($ 140m) and a Ghana-based gold mining company. The firm has also set itself ambitious targets for the next three years. In a filing with the SEC on September 20, 2020, the firm said it expected to report revenue of $ 1.48 billion in the financial year ending May 2023. In addition, over the next three years, it plans to expand its presence in the US. USA, Europe, the Middle East, Australia, East Asia and South Africa.
According to the latest available figures reported to the SEC, Interups had revenues of $ 139.99 million and a net profit of $ 101.49 million for the period of March 1, 2020 to June 15, 2020. While finances do not are audited, Palaypu said the period was under audit and the consolidated figures will be reported on January 4, 2021.
According to his LinkedIn profile, Palaypu worked as a Chartered Accountant at different auditing firms in Hyderabad between 1986 and 1995. In 1997, he moved to the US and obtained the status of Certified Public Accountant there.
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