BharatPe owner sends legal notice to Kotak Mahindra Bank over Nykaa IPO

BharatPe founder Ashneer Grover has sent a legal notice to Kotak Mahindra Bank for not getting Nykaa IPO (initial public offering). In response, the bank said that it is looking at legal options against Grover.

The fintech company founder couple, Ashneer and Madhuri Grover, has alleged that Kotak Mahindra Bank went back on its promise to get them shares worth ₹ 500 crore in FSN E-Commerce Ventures Ltd, which owns the e-tailer Nykaa.

Headed by Falguni Nayar – a former investment banker turned entrepreneur, Nykaa raised 5,352 crore last year through its IPO and the issue got subscribed 81.78 times.

The bank responded by saying it is looking at legal options against Grover for using “inappropriate language” in a call with a Kotak Mahindra Bank relationship manager. Last week, an audio clip went viral where a couple is purportedly speaking to who appeared to be a relationship manager from a bank. The man abused while and the bank executive was heard pacifying him.

“Our clients had proposed to apply for subscription to the shares of FSN in the name of both Ashneer Grover and Madhuri Grover, for shares worth ₹ 250 crore each. Out of the total sum of ₹ 500 crore which was proposed to be invested by our clients in the Nykaa IPO, our clients were required to pay a sum of approximately ₹ 20 crore at the outset, and the balance amount was to be paid after the allotment of shares of FSN to our clients,” the Grovers’ lawyer stated.

“However, to the shock and surprise of our clients, on 28 October 2021, after having repeatedly assured our clients that the shares of FSN would be allotted to them, Kotak informed our clients that it would not be able to provide IPO financing for the Nykaa IPO. Kotak’s refusal to comply with its assurances was on the pretext that it had decided not to finance the Nykaa IPO due to ‘erratic FII (foreign institutional investment) movements’ and ‘very high lending rates’,” the legal notice said.

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The notice further read: “Had Kotak informed our clients at the very beginning that it would be unable to provide IPO financing for the Nykaa IPO, our clients would have approached other financiers who were ready and willing to provide IPO financing to our clients for this IPO.”

Kotak Mahindra Bank responded stating that “there’s no breach or violation by the Kotak Group in any manner whatsoever”.

“This notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr Grover. Appropriate legal action is being pursued. We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever,” the bank statement read.