BlackRock's HPS Alleges $500M Telecom Loan Fraud by Indian-Origin Entrepreneur

BlackRock's private credit arm, HPS Investment Partners, recently uncovered an "extraordinarily brazen" fraud involving Bankim Brahmbhatt, an Indian-origin telecom entrepreneur. HPS, alongside BNP Paribas, had financed loans backed by fabricated receivables from Brahmbhatt's companies, including Broadband Telecom and Bridgevoice, leading to a $150 million write-off and lawsuits alleging over $500 million in fraudulent loans. The fraud involved falsified email domains and forged signatures to create fictitious collateral, misleading lenders and diverting funds offshore to Mauritius and India. Brahmbhatt's firms filed for Chapter 11 bankruptcy amid the scandal, which echoes broader concerns about asset-based financing fraud in private credit markets. HPS's affected funds are expected to post returns near the lower end of their target range, though the firm maintains a substantial asset buffer. Brahmbhatt remains in India and has not confirmed plans to return to the U.S., while legal proceedings continue.