Bengaluru: The ongoing feud between two cofounders of BharatPe, Bhavik Koladiya and Ashneer Grover, over Koladiya’s stake in the company, is an issue that BharatPe’s shareholders will have to resolve, according to sources familiar with the matter. ET reported on March 5, after Grover was removed from the fintech firm, about the growing discontent between the two, whose stake in BharatPe had been split between After being convicted of credit card theft in the United States, Koladiya, the company’s founder, became a consultant.
According to ET on Saturday, citing two people briefed on the subject, he was removed off BharatPe parent Resilient Innovation’s cap table, splitting his stake between Grover and the other cofounder Shashvat Nakrani.
“This is a matter between shareholders, and they must make a decision.” “The Board will not act,” a source familiar with the situation stated. Sequoia Capital India is one of BharatPe’s top owners, owning about 20% of the company. Insight Partners and Ribbit Capital, which each own roughly 10% of the company, as well as Coatue and others, are among the other investors.
Grover still owns roughly 8.5 percent of the company, despite the fact that he and his wife Madhuri Jain are no longer connected with it. On March 5, ET reported that Koladiya owns around 4% of Grover’s stock and that he is contacting lawyers about the situation. Following a $370 million investment round in August 2021, BharatPe was last valued at $2.8 billion.
Meanwhile, Grover’s attempt to sell his interest to outside investors has stalled, according to sources familiar with the situation. “He (Grover) went out to several possible investors, including high-net-worth individuals from the traditional economy,” one of the sources listed above said, “but there isn’t much demand for it yet, given the present controversies.”
Grover also missed out on Rs 100 crore in management stock that he was supposed to receive after his March 1 resignation. On March 4, ET reported that BharatPe was attempting to reclaim his restricted shares in the company, as per the company’s Articles of Association (AoA).
BharatPe did not respond to an email sent to him on Sunday.
Procurement review of vendors
On the governance front, BharatPe will restructure its procurement process and do further due diligence, according to people familiar with the present plans. Grover’s wife, Madhuri Jain, and her brother-in-law, Deepak Jagdishram Gupta, were named in the preliminary findings of an Alvarez & Marsal (A&M) report regarding vendor procurement.
The Directorate General of GST Intelligence (DGGI) is also looking into the company for anomalies in vendor payments. “As part of BharatPe’s evaluation of critical processes, vendor procurement would be completely overhauled.” These are now part of the focus areas for getting the house in order, according to a source close to the project.
According to A&M’s preliminary report, dated January 24, Gupta told the DGGI that he was in charge of vendor procurement and pleaded with the agency not to issue a show-cause notice.
“We have learned through the DGGI officers that our vendors do not exist or have never functioned at their major place of business.” In his response, he asked the DGGI to waive SCN because “we do not want a show-cause letter from the department on this topic.”
Grover and his relatives were accused of “extensive misappropriation of company funds,” including “creating fake vendors through which they syphoned money away from the company’s expense account and grossly abusing company expense accounts in order to enrich themselves and fund their lavish lifestyles,” by BharatPe last week.