Kotak Mahindra Bank Ltd. and Bharatpe co-founder Ashneer Grover find themselves in the middle of a clash with both sides threatening action.
The clash stems from talks of a financing arrangement during the initial public offering of FSN E-commerce Ventures Ltd., which owns Nykaa, and an allegedly heated conversation between Grover and a bank relationship manager when the financing did not come through.
On Sunday, Kotak Mahindra Bank said that it will pursue legal action against Grover for allegedly using inappropriate language against a Kotak Group employee. It placed on record its objections against Grover for using such language. The bank also said that it had received a notice on behalf of Grover on Oct. 30, 2021 and that it had responded appropriately.
The statement follows a voice recording, which surfaced on social media last week, where Grover is allegedly threatening a Kotak Group employee. While Grover had initially dismissed the voice recording as a “fake audio” in posts on Twitter and LinkedIn, he later deleted his statement.
Bharatpe declined to comment further on the matter. “We don’t have any comments on this matter,” said a spokesperson. Grover’s phone was switched off on Sunday evening when this publication tried to reach him.
In the notice sent by Grover to Kotak and its senior executives, he alleges that IPO financing was promised for subscription to the Nykaa IPO and failure to deliver on it led to notional losses for him and his family.
Grover has named Uday Kotak, MD & CEO, Kotak Mahindra Bank, Oisharya Das, CEO, Kotak Wealth Management, Shanti Ekambaram, group president- consumer banking and KVS Manian, director and president-corporate, institutional and investment banking at the bank in the legal notice.
BloombergQuint has reviewed a copy of the legal notice.
According to the notice:
On or around Sept.15, Grover told an executive of Kotak Wealth Management that he wishes to apply for Rs 500 crore worth of shares in Nykaa. Grover asked for IPO financing for the same.
On Oct. 10, the Kotak executive obtained Grover’s signatures on certain documents for subscribing to Nykaa IPO.
On Oct. 26, Grover reached out to reconfirm the arrangement. He was assured it will come through in a day or two.
On Oct. 28, Kotak comes back and says it cannot provide any IPO financing in this case, citing ‘erratic FII movements’ and ‘very high lending rates’.
“We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever,” the bank said in its statement on Sunday.
According to the legal notice, Kotak Group would be liable to pay “the gains our client would have made through the Nykaa IPO, by submitting an application of Rs. 500 crores in the HNI segment, less the cost of borrowing computed at 10% for 7 days.” Additionally, Kotak Group would be liable to pay Rs 1 lakh against legal costs, the notice adds.
“We will not be able to provide any response and we strictly adhere to the confidentiality of clients and their matters if any. Therefore, we decline comment,” said Sumit Agrawal, founder, RegStreet Law Advisors, the law firm that sent the notice on behalf of Grover.
Kotak Mahindra Bank’s decision to not provide financing allegedly led to a heated conversation between Grover and an executive of the bank. This conversation surfaced on social media a few days ago but has since been deleted.
Grover took to social media to term the conversation as “fake” but later deleted the post.
BloombergQuint is not disclosing contents of that conversation since it cannot independently verify its veracity.
Bharatpe, co-founded by Grover, is one of the two equity investors in Unity Small Finance Bank, which has been chosen by Reserve Bank of India to rescue Punjab & Maharashtra Cooperative Bank. Bharatpe has partnered with Centrum Group for this transaction, although the licence has been granted to the Centrum Group. The small finance bank will take over PMC Bank’s assets and liabilities as part of a resolution proposal which is pending final approval from the RBI.
In a statement late on Sunday, Centrul Group clarified that it is not reconsidering its partnership with Bharatpe. The clarification followed unconfirmed reports on social media that Centrum chairman Jaspal Bindra had written to the RBI on the matter.
“We confirm that Mr. Jaspal Bindra and the Centrum Group have not written to the RBI to reconsider the JV (joint venture) with Bharatpe for Unity Small Finance Bank,” a spokesperson for Centrum Group said in a statement.