Ashneer Grover controversy: Interim report on governance lapses in BharatPe in 2 weeks: CEO Suhail Sameer

BharatPe chief executive Suhail Sameer in a communication to employees has stated that there were a couple of “serious allegations” of governance lapses, which warranted a fine-tooth-comb audit of governance practices by outside experts.

He requested them to keep their trust in the leadership amid co-founder Ashneer Grover’s tussle with the company’s board and said the interim report of the auditors should come in the next couple of weeks. Sameer did not elaborate on the allegations.

Grover, who was sent on a three-month leave following allegations of using abusive language against Kotak Mahindra Bank staff and fraudulent practices, has denied all allegations.

BharatPe CEO in the letter to employees, a copy of which is with PTI, said a governance review is being carried out by well-known and reputed external firms (SAM, Alvarez and Marsal (A&M) and PwC).

“Based on some internal complaints, we decided to do a full audit of our governance processes,” he said. “While many of the findings of the review are pretty standard for a fast-growth company of our size, there are a couple of more serious allegations, which the review is still substantiating.”

Stating that there is nothing that can’t be corrected going forward, he said none of these has any bearing on the medium to the long-term health of the business.

“We expect the review partners (consultants) to share an interim report with the Board in a couple of weeks,” he said.

“Meanwhile, I would just request all of you to keep your trust on the Board of BharatPe, which comprises some of the best investors in the world and veterans of the Indian Banking Industry. Whatever the Board will decide, will be beyond doubt, in the best interests of our employees, our merchants and our consumers.”

BharatPe was better known for its QR code aggregator app, service and surprise bank licence until an audio clip surfaced on social media with claims of Grover, who is co-founder and managing director of the firm, abusing and threatening a Kotak Mahindra Bank employee for missing out on share allotment during the initial public offer of FSN E-Commerce Ventures, which operates online fashion and wellness company Nykaa.

Later, Grover reportedly stated that he was “arm-twisted” by the company’s investors into going on leave and had lost confidence in CEO Sameer Suhail, and he should be removed.

Shashvat Nakrani, the fintech firm’s other founder, however, threw his weight behind the chief executive, saying Suhail continues to enjoy his confidence.

“BharatPe, as a team, has been up against a different challenge this time,” Sameer Suhail wrote to employees. “We are under constant scrutiny and spotlight by the media.”

While some of the reports are partially true, most are unsubstantiated rumours, he said. Business, however, continues to be an incredible growth trajectory.

“Hardly any dip in TPV, continued scale-up of postpe, stellar lending collection performance, great growth at PAYBACK, and as with each COVID wave in BharatPe’s history, a couple of fab products (are) ready to launch. We hit the annualised TPV run-rate of USD 16 billion in December and are already back at that run-rate in 

February despite many markets still impacted with COVID,” he wrote.

BharatPe has “huge amounts of cash in the bank to keep building”. It has USD 500 million in the bank, and all existing investors are backing it. “And while the press may say as it sees fit, we are still getting 2-3 new inbound conversation requests every week from Funds looking to invest in us,” he said, adding the company does not need to raise capital in a foreseeable future.

The chief executive said employees are the pillars on which BharatPe is built, and they “eventually take us to IPO over the next 2-3 years”.

“It is my commitment (not only on my behalf but on behalf of the wider leadership) that we will emerge stronger from all of this. My only request is to keep calm and have faith in all of us, on the Board, and most importantly, on you,” he said.

BharatPe has built a fabulous business, and a few months of turbulence are not going to stop it.

While postpe is the fastest Book Now Pay Later (BNPL) product to hit 500 crore TPV, loyalty platform PAYBACK is on a spree (January was the highest ever points redemption month, and thus highest-ever revenue), he said.

“All of this put together means January 2022 was our lifetime best month so far in terms of Revenue, as well as on margins,” he said.

“In January, RBI also gave us the PMC bank amalgamation approval with Unity (our Small Finance Bank in partnership with Centrum), and both Centrum and our teams are working hard towards building India’s first truly digital bank.”

Grover in media interviews earlier this month reportedly stated that the current CEO Suhail Sameer does not have his support and that he is the “investors’ puppet”. He has reportedly stated that he will leave the company only if an investor buys out his 9.5 per cent stake for Rs 4,000 crore (USD 6 billion valuations for BharatPe).

Nakrani confirmed that he has not given any consent or demanded the removal of Suhail Sameer from the board. This has complicated Grover’s pursuit to oust Sameer as both the founders need to consent jointly to remove the CEO.

BharatPe serves over 75 lakh merchants across 150 cities. Its investors include Tiger Global, Dragoneer Investment Group, Steadfast Capital, Coatue Management, Ribbit Capital and others. 

(With PTI inputs)

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