Explained: Why did Ashneer Grover resign from BharatPe?
BharatPe co-founder and managing director Ashneer Grover has resigned from the company, just days after the fintech startup terminated services of his wife and the company’s head of controls, Madhuri Jain Grover, regarding alleged financial irregularities.
In a statement, BharatPe said Grover’s resignation came “a few minutes” after receiving the agenda for the next board meeting “which included the submission of PwC’s report regarding his conduct and the review of actions based on it”. The company added that the Council “reserves the right to take action based on the findings of the report”.
The development also closely follows Grover’s emergency arbitration plea challenging BharatPe’s decision to conduct a corporate governance audit at the company, be rejected by the Singapore International Arbitration Center (SIAC).
Why did Ashneer Grover resign from the BharatPe board?
In his resignation letter, Grover alleged that the company’s board of directors had “evicted” him for his “vested interests”. He alleged that recent developments related to the company appear to be a “battle of egos being played at the media gallery under the guise of ‘good governance'”. Grover also alleged that the “investor model” for getting an “unwanted” founder out is to make the founder “the bad guy in the room,” which he claims is done to him.
“Today I am reviled and treated in the most disgraceful manner,” Grover wrote in the letter.
He said the opinions of board members, on the business and issues on the ground, have been “colored through the windows of the ivory tower in which you all reside.”
“The basic fact is that all of you as investors are so removed from reality that you have forgotten what real businesses look like and have no idea what it took to run that business day in and day out. day. Your view of BharatPe has been confined to the small window of your Zoom Meetings app, far from the sweat of the brow that makes BharatPe the business leader he is. None of you, including those based in India, have ever come to our offices once, since the pandemic turned our lives upside down and sought to stifle the economy. Not once,” Grover wrote in his resignation letter.
The Indian Express has contacted Grover for comment, but has yet to receive a response.
Will Ashneer Grover continue to hold shares in the company?
In his resignation letter, Grover reportedly said he would continue to be the company’s largest individual shareholder. Grover owns a 9.5% stake in BharatPe, and according to the company’s latest fundraising, his stake was worth Rs 1,800-Rs 1,900 crore.
What does this mean for BharatPe?
The Indian Express had earlier reported that BharatPe’s board was planning to invoke certain clauses of the shareholders’ agreement to terminate Grover’s employment and cede some of that stake to him. The fact that Grover said he would continue to retain his stake in the company, even if he left the position of CEO, indicates a possible breakdown of talks on the acquisition of Grover’s stake by the company. Grover currently owns 9.5% of BharatPe’s capital, while his co-founder Shashwat Nakrani owns 7.8%. Venture capitalist Sequoia Capital India is BharatPe’s largest shareholder with 19.6%, followed by Coatue at 12.4% and Ribbit Capital at 11%. In addition to these three, Tiger Global, Steadview Capital and Beenext have also backed BharatPe, and together these renowned investors own 60.4% stake, as of August last year.
What led to the fight between BharatPe and Ashneer Grover?
In early January, an audio clip of Grover allegedly used profanity against a Kotak Bank staff member. While claiming the clip was fake, the bank said it would be take legal action above.
Two weeks later, Grover continued voluntary leave until the end of March. This happened after an email thread between Grover and Sequoia (the main shareholder of BharatPe), highlighting the differences between the two parties, came to light.
Meanwhile, Grover’s wife Madhuri has also been sent on leave.
Later in January, BharatPe brought in independent auditors to examine the company’s practices under Grover. A preliminary report by law firm Alvarez & Marsal accused Madhuri of financial fraud in February.
On February 23, BharatPe sacked Madhuri for embezzlement.
Last week, the Singapore International Arbitration Center (SIAC) dismissed Grover’s emergency appeal against the ongoing governance review.
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