Ashneer Grover in Talks with Investors to Sell His 9.5% Stake in BharatPe

Synopsis: Ashneer Grover, Founder, MD of BharatPe and a well-known controversial Shark on Shark Tank, is in talks with multiple investors to sell off his 9.5% stake in BharatPe. He has demanded 4000 Crore Rs. from the board for his 9.5% stake to exit BharatPe. 

On January 5, an anonymous Twitter user posted a link to an audio clip from SoundCloud, an audio-hosting platform. In the audio clip, a bank employee informs two of his clients that the bank is unable to fund a bid to buy a stake in FSN E-Commerce Ventures, which runs the cosmetics platform Nykaa. During the conversation, you hear the bank employee trying to calm both clients down, while both the customers can be heard using foul language. The audio has been removed from SoundCloud but has been uploaded by others to various platforms including YouTube. 

When the audio recording was released, it was alleged that the bank employee was from Kotak Mahindra Bank and the clients were Ashneer Grover and his spouse Madhuri Grover. The customers on the recording not only used offensive language but had also threatened the employee.

The sale offer Ashneer initiated for his stake was based on an ongoing investigation and an independent audit conducted by BharatPe, which found financial irregularities in the company. The company and its founders have been embroiled in a month-long rigmarole that was triggered by a leaked audio clip alleging that Grover threatened and abused a Kotak Mahindra Bank employee. Grover is said to have hired law firms, and reports have validated it. The names of the reported law entities that Grover hired are Karanjawala, Ritin Rai, Meraki Law. 

“While Ashneer is offering his stake at the current valuation of $2.8 billion, he could be willing to negotiate in the ballpark of around $1 billion valuation… But finding a buyer will not be an easy task considering the events of the previous month,” said someone aware of developments. He also added that with the current financial scrutiny, an investor will be precarious even at a lofty discount.

“Ashneer had talks with several investors to sell his shares, but the major investors hold ROFR on the founder’s shares. This would require approvals which will be significant to this proposition” said another official, adding that none of the existing shareholders are likely to buy more shares in the fintech company.

For Grover, selling his portions will be difficult considering the terms of navigating an event like this.

As indicated by BharatPe’s Articles of Association – a legal archive comprising rules for the inside administration of an organization recorded by its parent Resilient Innovations with the Registrar of Companies (RoC) in September last year, Grover needs to offer his stake to current investors having the primary right to it.

On the off chance that if the other founder or investors are unwilling to buy his stake, it can be offered to external entities. Shashvat Nakrani is the other co-founder with around a 7.8% stake in BharatPe.

ET gave an account of February 4 that Grover shot off a letter to the organization board looking for the expulsion of BharatPe CEO Suhail Sameer as a chief on the board. Nakrani said in a different articulation that he was immovable with Sameer.

Amusingly, the recording, obtained through the business intelligence platform Tofler, signified that particularly restricted shares of founders can be repurchased by the firm at a lower valuation or the price paid by the respective founder at the time of procurement of those shares, given the founder, or the organization has fired the employment showing cause.

According to the terms, the restricted stake is characterized as 75% of the founder’s shares after BharatPe’s Series C subsidizing in 2019 and follow-on shares issued at the end of Series E financing. This can be moved to an employee welfare trust or can be procured from the respective founder with appropriate approval from the board and confirmation of the major (51% or more) investors. 

For the cause to be laid out for termination, the relevant founder must be charge-sheeted for an offense that encompasses ‘moral turpitude’ or frauds regarding company affairs, giving rise to an adverse impact on the organization’s business. Wilful offense or gross negligence are likewise reasons for such termination in BharatPe’s AoA. Everything in this regard should be officially recognized by one of the Big Four audit firms which at present don’t have any association with BharatPe.

Ashneer says that the board is arm-twisting him to exit the company and even the CEO Suhail Sameer is siding with the investors. He has declared that his 9.5% stake is concrete and cannot be touched by anyone. He also added that he is absolutely unapologetic and has a lot planned for his future.