Jefferies credit fund faces nearly $500 million Radiant World exposure amid fraud allegations

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Jefferies credit fund Radiant World exposure

Highlights

Jefferies' Point Bonita fund obtained a High Court freezing order for up to $499 million against Radiant World, Pinkesh Nahar, Sapphire Minmetals, and Rakesh Sethi amid fraud allegations.
Point Bonita’s exposure to Radiant World rose from $35 million in 2021 to several hundred million dollars, forcing a forbearance agreement after investor redemption pressure post-First Brands collapse.
Jefferies now faces two lawsuits over its $715 million First Brands exposure as well as mounting creditor claims and liquidity strain amplified by alleged invoice fraud at Radiant World.

High Court action and fund exposure

As reported by Financial Times, a Jefferies-managed fund secured a freezing order from London's High Court last week for up to $499 million against Radiant World, its founder Pinkesh Nahar, Sapphire Minmetals and Sapphire chair Rakesh Sethi, according to people familiar with the matter.

The size of the claim places the fund among the largest creditors tied to a second alleged invoice fraud case. Jefferies' Point Bonita fund, which specializes in invoice-backed lending, had already been hit by the fallout from First Brands Group, an Ohio-based auto parts business to which Jefferies disclosed $715 million of exposure last October.

Radiant, which grew rapidly into one of the world's largest iron ore traders, has come under pressure in recent weeks after several lenders cut ties over alleged inconsistencies in financing documentation. Radiant and Nahar deny wrongdoing, while Radiant and Sapphire say they are independent companies.

Hong Kong company records show Radiant previously held a majority stake in Sapphire until 2015. One person who worked with Radiant on its financing describes Nahar and Sethi as business partners who had known each other for years.

Liquidity strain and wider implications

The trade finance fund began financing Radiant in 2021, and its exposure increased from $35 million to hundreds of millions of dollars over the following four years, according to people familiar with the matter. After Point Bonita faced investor redemption requests in the wake of First Brands' collapse, it moved to stop rolling existing facilities with the commodities trader, creating liquidity problems for Radiant, they added.

Point Bonita signed a forbearance agreement with both Radiant and Sapphire in April, according to people familiar with the matter. Such agreements typically give borrowers in default more time to repay, agree payment plans or provide extra collateral instead of facing immediate repayment demands.

The freezing order also threatens Nahar's personal assets. UK property records show companies owned by Nahar bought two luxury apartments in London's Fulham for a combined 12.15 million pounds in August 2022, and he also chairs a Bollywood film production company in India and owns a Singapore-based investment firm focused on technology stakes.

Jefferies is also dealing with two separate lawsuits tied to Point Bonita's First Brands exposure, one from an investor in the fund and another from lender Western Alliance. The bank denies fraud allegations in both cases, says the claims lack merit, and accuses Western Alliance of making false and misleading statements; Jefferies declines to comment, while Radiant, Sapphire, Nahar and Sethi do not respond to requests for comment.

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