On 29th November 2023, shareholders of United Investments Limited (UIL) will be called upon to ratify a decision of the Board redefining the course of the group and its people. From shareholders, middlemen  to regulators, they all seem to have found a convenient corner in this looping circle. The story of UIL is an absolute masterclass for every aspiring law maker, enforcement officer and white collar crook.

The décor  

Back in 2018, the United Investments Limited embarked on  splitting of its activities based on the rationale that Regulatory requirements had become increasingly stringent and the company had to take bold  measures as to meet the aspirations of its shareholders. Michel Rivalland, CEO of UIL had back then affirmed that “The segregation of our financial and non-financial portfolio is being carried out in a way which not only preserves existing shareholder value, but also unlocks latent value”.

The exercise resulted in restructuring AXYS as a pure financial services company which would further develop its financial services offerings as to include integrated wealth solutions for private clients. While the other offspring, OXIA would focus on acquiring stakes in companies, furthering their development and exiting at an opportune moment. Over the last 5 years a  myriad of entities has been created across various sectors and  reaching out to distant places such as the snowy mountains of Switzerland or  the shores of Panama.

The current proposal as depicted in the explanatory notes can be summarised as a two-fold exercise. The first one  being the acquisition of shares held in UIL by Michel  Rivalland and Didier Merven through Goldstream Ltd, secondly the Management Buy Out ( MBO) of AXYS by Alternativ Capital Investments Ltd ( ACI), an entity mustering key members of current AXYS management, also share holders of the company and a consortium of foreign investors. The whole deal will be wrapped as a Share Swapping with a financial implication of approximately MUR 1 billion. The narrative accompanying the proposal emphasises on the interest of shareholders “given that it is in the context of the realisation of UIL’s investments in its financial services subsidiaries which will result in reduction of its debt exposure and increasing the remaining shareholders stake in UIL”. At first sight absolutely nothing abnormal in this Swap deal, though some do tend, rightly so, to believe that the corporate world shares strange resemblance with a Swingers Club.

The Axys of deceit

The explanatory notes on the proposal  are on their own are an amazing piece of reading and of evidence. Digging even further into the previous financial statements and company literature, unless blinded by some obscure interest, hard disturbing facts should be obvious.

While the primary purpose of  financial statements is to illustrate the  condition and activities of a company during the fiscal year enabling  users of the financial statements to predict future cash flows of the company, one may tend to believe the statements of UIL and its entities were cooked  by a celebrity Chef. The statements do provide solid argumentation to critics of the fair value approach who fancy hard facts rather than estimates which could easily be erroneous or intentionally manipulated. Guess no one has ever heard of ENRON!

Speaking of lesson, the current turmoil stirred by the collapse of US based  workspace provider WeWork should be one of them. The much hyped start up, recently valued at USD 47 billion went crashing, resulting in massive losses for  investors. Yet the warning signs were flashing at all times. Pointing at  market crisis, wrong business model or poor management would be an even greater blunder. As in many cases, it is the side personal ventures of those at the helm of management, self-serving of funds from subsidiaries, loans ditched beneath the rug, self-attributing franchise costs and absurd fees which lead to chaos.

It is an undisputable fact that under the leadership of Didier Merven and Michel Rivalland  the share price of UIL which at some point stood at MUR 11 plummeted to MUR 5  and crippled the company with unprecedented debt. The restructuring of 2018 has resulted in a major disaster and the proposed way forward might well be a greater one. Severe critics by minority shareholders  have been levelled against the  modus proposed and approved by the concerned parties themselves.

The  buyback of 20,162,513 shares held by both Michel Rivalland and Didier Merven in UIL at a price of MUR 8.38 does raise eyebrows. More so since the Explanatory Notes signed by chairman Didier Merven himself does underline that the highest market price stood at MUR 6.70 while the average was MUR 4.49. The latest financial reports do indicate a debt of MUR 2.5 billion and if we were to dispose of the 204 million shares ( representing the total number of shares)  at the current value of MUR 5, it would be fair and realistic to state  that the group had gone bust. A dissenting voice from shareholders even goes to the extent of stating that  billions raised from investors was spread across a web of companies operating in a way which matches the description depicted by  experts from Singapore based nTan – Ponzi Like.

In the build up of its case justifying the introduction of CSG, the government had stressed  on the impotency of the Nation Pension Fund (NPF) to provide for future needs due to sterile investments. The absolute pitch black darkness on the whereabouts  of the MUR 150 billion is outrageously beyond any sound reasoning. The UIL story is a perfect illustration of the serious mismanagement of the NPF, thereby validating public intrusion in this bacchanalian party.

A careful study of financial reports would enable a proper understanding of how from 2014 to 2022 the NPF has subscribed to bonds issued by different entities of the UIL group. In fact, the issuer of the bonds subscribed by NPF has been shifted onto various companies. From UIL Ltd to Axys Ltd, from Axys Ltd to UIL Bis Ltd then later on, from UIL Bis Ltd to Oxia Ltd. What initially started as a MUR 400 million investment ended up to MUR 1,450 M. We observe in the notes to the financial statement that  “The new subscription amount of Rs.1,450M has a maturity date of September 30, 2024 and is linked to the realisation of the Company’s investment in Attitude Hospitality Ltd” . Apart from the MUR 1 billion glossy image,  Attitude Hospitality Ltd only real value lies in its  48,74%  shares held in Attitude Property Ltd . A holding whereby the NPF holds 11,12% shares. It would be fascinating  to hear out the arguments of the members of the NPF investment Committee and in particular its Director Veenay Rambarassah. Moreover the Attitude Hospitality Ltd has also availed an assistance of MUR 500 million from the Mauritius Investment Corporation. Again backed by thin air.

It is hard not to admire the  brilliance of Michel Rivalland and Didier Merven in their attempt to wriggle out of sinking ship. By acquiring Axys companies and Spice Finance for MUR 950 million they would walk away with the unicorn leaving behind the donkey. As for UIL shareholders, though happy to see the back of Rivalland and Merven, they still would be left with a liability book of MUR 2.5 billion adding on to the multiple layers of debt carefully camouflaged within each individual company. Amateurs of  British humour might  well define UIL as United In Loss.

While it is up to the shareholders of UIL to investigate  the possible cannibalisation of their business, the responsibility of ensuring proper compliance to laws and safeguarding public interest is the sacrosanct duty of regulators and enforcement agencies. One of their main concern should be funds poured into the economy by crime syndicates both locally and from regional countries. If decades ago crime syndicates  favoured laundering through informal activities, they now have evolved multi fold, using  sophisticated mechanism and seasoned professionals to serve their mission. One of such crime syndicate investing massively in our real estate, healthcare and financial services originates from Madagascar. With our institutions busy snoring when they are not  rolling out the red carpet for the likes of Glen Agliotti or Peter Uricek, glorious days lie ahead for the crime syndicate and white collar crooks.


Rajen Valayden

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