BharatPe shareholders may have to settle Grover-Koladiya fight, board unlikely to intervene

Bangalore: The ongoing dispute between two BharatPe co-founders Bhavik Koladia and Ashneer Grover over Koladia’s stake in the company is an issue that BharatPe shareholders will have to resolve, as the company board is unlikely to intervene in the matter. Sources familiar with the matter said.

ET reported on March 5, after Grover was ousted from the fintech firm, about growing discontent between him and Coladia, whose stake in BharatPe was split between two other cofounders. Colladia – who started the company – took on an advisory role after being found guilty of credit card fraud in the US. ET had on Saturday dropped BharatPe’s parent Resilient Innovation from the cap table while sharing its stake between Grover and other co-founder Shashwat Nakrani, citing two people who had knowledge of the matter.

“It is an issue between the shareholders and they have to decide. The board is not going to interfere in this,” said a person briefed on the matter.

Sequoia Capital India is one of the largest shareholders of BharatPe and holds approximately 20% in the firm. Other investors include Insight Partners and Ribbit Capital — which each hold about 10% — Coatue, and others.

Although Grover and his wife Madhuri Jain are no longer associated with the company, Grover holds around 8.5 per cent stake in the company. ET reported on March 5 that Koladia holds around 4% in Grover’s stake and that he is consulting lawyers in the matter. BharatPe was valued at $2.8 billion in August 2021 after funding of $370 million.

Meanwhile, Grover’s effort to sell his stake to outside investors hasn’t seen much traction, people familiar with the matter said. “He (Grover) reached out to a number of potential investors, including individuals with high net worth from the traditional economy, but there is not much demand yet given the current controversies,” said one of the people mentioned above.

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His resignation on March 1 resulted in Grover losing Rs 100 crore in management shares that he was supposed to receive. ET also reported on March 4 that BharatPe was looking to withdraw its restricted shares in the company. Article of Association (AoA) of the company.

An email sent to BharatPe on Sunday did not elicit any response.

seller purchase review

On the governance review front, BharatPe will revamp its procurement process for sellers and further due diligence will be done on the matter, said people aware of the existing plans. This comes after Grover’s wife Madhuri Jain and his brother-in-law Deepak Jagdishram Gupta were named in the preliminary findings of the Alvarez & Marsal (A&M) report on seller purchases. The Directorate General of GST Intelligence (DGGI) is also probing the company for irregularities in payments to vendors. A person close to the development said, “Vendor buying will be completely revamped as part of a review of key processes at BharatPe. These are now part of the focus areas to streamline home.”

A&M’s preliminary report on January 24 noted that Gupta had told DGGI that the seller was responsible for the purchase, and requested the agency not to send a show-cause notice.

“We have come to know that our vendors, as informed by the DGGI officials, are not present or have never operated at their principal place of business. We do not want show cause notice from the department on this matter and request you to waive the SCN,” he asked DGGI in his reply.

Last week, BharatPe hit out at Grover and his relatives, saying they were “involved in widespread misappropriation of company funds, including but not limited to creating fake sellers, through which they deducted money from the company’s expenditure account”. Withdraw money and grossly misuse the expenditure accounts of the company so that they can enrich themselves and raise money for their lavish lifestyle.”

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