ongoing conflict between two cofounders of BharatPe – Bhavik Koladiya and Ashneer Grover – over Koladiya’s stake in the company is an issue BharatPe’s shareholders will need to sort out, with the company board unlikely to intervene on the matter, sources aware of the matter said
ET reported on March 5, after Grover was removed from the fintech firm, about the growing discontent between him and Koladiya, whose stake in BharatPe had been split between the two other cofounders. Koladiya – who started the company – assumed the role of a consultant after he was convicted of credit card fraud in the US. He was removed from BharatPe parent Resilient Innovation’s cap table, splitting his holding between Grover and the other cofounder Shashvat Nakrani, ET reported on Saturday, citing two people who were briefed on the matter.
“This is an issue between shareholders and they will have to take a call. Board is not going to intervene in it,” a person briefed on the matter said.
Sequoia Capital India is among the largest shareholders in BharatPe with almost 20% in the firm. Other investors include Insight Partners and Ribbit Capital – which hold around 10% each – Coatue, and others.
Though Grover and his wife Madhuri Jain are no longer associated with the company, Grover retains around 8.5% in the firm. ET reported on March 5 that Koladiya’s holding in Grover’s stake is about 4% and that he is consulting lawyers on the matter. BharatPe was last valued at $2.8 billion following a $370 million funding in August 2021.
Meanwhile, Grover’s effort to sell his stake to external investors hasn’t seen much traction, people briefed on the matter said. “He (Grover) reached out to several potential investors including high networth individuals from the traditional economy but there is not much demand for it yet, given the current controversies,” one of the people cited above said.
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Grover also lost out on Rs 100 crore in management stocks that he was set to receive, due to his resignation on March 1. ET also reported on March 4 that BharatPe was looking to claw back his restricted shares in the company, in line with the company’s Article of Association (AoA).
An email sent to BharatPe on Sunday did not elicit a response.
Vendor procurement review
On the governance review front, BharatPe will revamp its process of procuring vendors and there will be further diligence on the matter, people aware of the current plans said. This comes after Grover’s wife Madhuri Jain and her brother-in-law Deepak Jagdishram Gupta were named in the initial findings of an Alvarez & Marsal (A&M) report over vendor procurement. The company is also being investigated by the Directorate General of GST Intelligence (DGGI) for irregularities in payments to vendors. “Vendor procurement will be revamped fully as part of the review of key processes at BharatPe. These are now part of the focus areas to set the house in order,” a person close to the development said.
The preliminary report of A&M, dated January 24, mentioned that Gupta had told the DGGI that he was responsible for the vendor procurement, and pleaded with the agency to not send a show-cause notice.
“We have come to know that our vendors, as informed by the DGGI officers, do not exist or never operated at their principal place of business. We do not want a show-cause notice from the department on this matter and request you to waive SCN,” he asked the DGGI in his reply.
Last week, BharatPe hit out at Grover and his relatives, saying they engaged in “extensive misappropriation of company funds, including, but not limited to, creating fake vendors through which they siphoned money away from the company’s expense account and grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles”.
