Who owns Sequoia Capital in India and other musings around Obfuscation
This is the second post in our series on Sequoia Capital (the first was published via email in our newsletter). In this post we examine ownership information of Sequoia Capital’s India operations that have been disclosed in filings with the US Securities and Exchange Commission (SEC).
First published here — > https://paper.vc/who-owns-sequoia-capital-india-and-other-musings-around-obfuscation
Sequoia Capital is represented in India by a set of individuals who are directors in Sequoia Capital India Advisors Private Limited (“Sequoia India”).
According to data filed with the SEC by Sandeep Kapoor, the firm’s Director, Legal, these individuals are Shailendra Singh, GV Ravishankar, Mohit Bhatnagar, Abhay Pandey and VT Bharadwaj (“Sequoia People”).
But the sole owner of Sequoia India is a Mauritius-based entity called Sequoia Capital India Operations, LLC (“Sequoia Mauritius”).
The filings with the SEC disclose a detailed indirect ownership trail that includes trusts and leads up to the Cayman Islands and beyond.
2017 India v 2018 Mauritius Filings
The interesting thing though, is that the ownership trail in the version filed by Sandeep Kapoor in 2017 differs significantly from the version filed by Reshmah Bibi Choomka in 2018.
The 2017 version filed for Sequoia India reveals only a single trust that owns a single company Silk Orchid Limited has ownership interest in Sequoia Mauritius which in turn owns Sequoia India. But the 2018 version filed for Sequoia Mauritius reveals the not just 1 but 5 companies have ownership interest in Sequoia Mauritius.
Furthermore, the 2018 version reveals 5 trusts that own each of these 5 companies. The two versions again differ in who owns or controls the trusts. The 2018 version indicates that Barclays manages the trusts via a Cayman Islands — Luxembourg structure. The 2017 version indicates that Zedra manages the trusts via Cayman Islands — Malta — Luxembourg structure.
Could Sequoia Capital have overhauled its entire fund structure in the matter of a year?
Perhaps.
But then again the 2017 version indicates that Zedra took over ownership in 2017 whereas the 2018 version indicates no such takeover.
Why this raises questions
I learnt fairly late in my former life as a lawyer that trusts are an interesting way to obfuscate ownership.
I remember a particularly vexed due diligence that I conducted on a group company of a family-owned business group as part of an investment transaction. During this transaction, the family’s refusal to disclose the beneficiaries of the trust that owned a substantial stake in the company became a sticking point in the negotiations.
As I learnt over subsequent years private trusts are a fairly standard mechanism to obscure the true owners or beneficiaries of an investment. They allow traditional business houses and newer money managers alike to obfuscate ownership and smudge the money trail by creating beneficial ownership structures. There is another term for beneficial ownership in India. Benami.
This is not to say that all private trusts are illegal or set up with any intent to evade the law. But to say that whenever we find private trusts in the data we collate, it raises a flag for further investigation.
A complete fund overhaul raises another flag.
The last time Sequoia Capital undertook an overhaul of its India ownership structure was in 2011 when the four founding members of Sequoia Capital in India quit.
In part 3, we’ll take a look at Sequoia’s investment activity over the last three quarters to understand what’s going on inside the Indian operations of one of the world’s most well-known venture capital firms.
