The Circle IPO's strangest winner
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Oak Investment Partners is one of the biggest winners from the IPO of stablecoin issuer Circle, with shares worth in excess of $3 billion.
- It has a convicted crook to thank. Except that he might be dead.
Catch up quick: Oak first backed Circle in 2014, as part of a $17 million Series B round. Overall, it appears to have invested less than $30 million — which means the current value more than repays the $2.5 billion fund out of which it invested.
Zoom in: Oak's deal lead was Iftikar Ahmed, a general partner who'd come to the Connecticut-based firm more than a decade earlier after stints with Goldman Sachs and Fidelity.
- One year later, Ahmed was charged by the SEC with insider trading after being tipped off about a potential merger.
- But the big bombshell came soon after when Oak learned that Ahmed was robbing the firm itself — via a scheme whereby he directed Oak investments into accounts that he controlled.
- He also convinced his partners to invest in a company without disclosing that he already had a personal stake in the business.
- Oak fired Ahmed, who ultimately would face federal fraud and state embezzlement charges.
Behind the scenes: Ahmed fled the country, even though the feds were in possession of his passport, leaving behind his wife and three kids.
- Eventually came word that Ahmed had been detained in India and was allegedly unable to return to the U.S., where he was nonetheless convicted.
- His wife, Shalini, who also had been a Goldman Sachs banker, has continued fighting in court to recover some of the family's frozen assets.
- In a brief filed last month, Shalini claims that she and the government were notified in January of Ifty's passing, and received a copy of the death certificate.
- She adds: "The government has questioned the validity of the certificate. Shalini understands there is an ongoing investigation."
Zoom out: Oak would never raise another fund, with the Ahmed saga having wrecked LP confidence, although some of its partners would successfully launch a new firm called Oak HC/FT.
- Circle founder and CEO Jeremy Allaire declined to discuss how he was first introduced to Ahmed, with a company spokesperson citing IPO quiet period restrictions.
The bottom line: Ifty Ahmed was a very good venture capitalist, albeit a corrupt one.
- In addition to Circle, his deals include Airespace (acquired by Cisco), GMarket (acquired by eBay), and Kayak (acquired by Priceline).
- What's always been confounding is why someone so wealthy would risk it all for just a bit more, particularly if he believed in the startups he was backing. The Circle deal ultimately might have paid him hundreds of millions of dollars.
- Now we'll never know. Maybe.
