Risky Investment: NPF & NSF Expose Rs 1.5 Billion of Public Funds

A substantial financial investment of Rs 1.5 billion (Rs 1,570,914,505) by the National Pension Fund (NPF) and the National Savings Fund (NSF) is currently under intense scrutiny by the government. This significant sum was invested in secured bonds issued by Hold Attitude Ltd in March 2022, raising concerns due to the potential risk it poses to public resources.

In March 2022, the NPF and NSF allocated a notable amount to bonds secured by Hold Attitude Ltd, a subsidiary of United Investments Ltd (UIL).

Specifically, the NPF invested Rs 1,001,439,000, while the NSF contributed Rs 448,561,000. This investment was backed by a 40% guarantee of shares in Attitude Hospitality Ltd (AHL), which KPMG valued at Rs 2.29 billion as of February 2024.

At the time of the investment, the environment appeared favorable; UIL, a publicly listed company on the Mauritius stock exchange, had just undergone a restructuring to separate its financial and non-financial clusters, which was expected to streamline its operations.

However, troubling signs began to emerge in September 2023 when Hold Attitude Ltd failed to make interest payments on the bonds and subsequently requested multiple deadline extensions.

As of September 30, 2024, Hold Attitude Ltd was expected to return the full principal amount of Rs 1.5 billion, along with accrued interest.

Unable to fulfill this obligation, the company sought a six-month extension for capital repayment and additional time for interest payments.

On September 20, 2024, the NPF and NSF’s investment committee rejected this request to postpone the repayment deadline of September 30, 2024.

However, during a meeting on October 2, 2024, the committee agreed to extend the deadline to March 2025, contingent upon immediate payment of interest.

Despite this agreement, the interest owed for the December 2024 deadline remains unpaid, deepening concerns over a possible default.

Attitude Hospitality Ltd informed the NPF and NSF that it could only fulfill the interest payment due in September 2024 after liquidating some segments under UIL by the end of December 2024.

In a recent parliamentary session, Minister of Social Security Ashok Subron responded to a query from majority MP Ehsan Juman regarding the investment situation.

He clarified that the investment committee had issued a warning to Hold Attitude Ltd, stating that if payments were not made, they would activate the security clauses outlined in the subscription agreement.

This would entail transferring the 40% pledged shares of Attitude Hospitality Ltd to the NPF and NSF under the supervision of the State Bank of Mauritius Ltd.

While this move offers a degree of protection, it does not ensure that public funds will be fully recovered.

Pledged shares represent ownership in a business that serves as collateral for a debt or loan. If the owners (borrowers) fail to repay the debt as per the agreed terms, the creditor (lender) can take ownership of these shares.

As of December 3, 2024, Hold Attitude Ltd owes Rs 1,084,948,311 to the NPF and Rs 485,960,194 to the NSF.

Minister Ashok Subron emphasized that the NPF/NSF investment committee is closely monitoring the situation regarding the recovery of capital and interest related to the investment in Hold Attitude Ltd.

According to existing legislation and the terms of the subscription agreement, in the event of default, the committee must act in the best interest of both funds, the NPF and the NSF.

Source: Defi Media