NEW DELHI: As Kotak Wealth Management finds itself in a public spat with Ashneer Grover, founder of fintech company BharatPe, sources say that cash crunch with the NBFC that does IPO financing for wealth management firm’s clients was the reason for its inability to finance an IPO subscription request by Grover.
While the legal notice sent by Ashneer Grover to Kotak Wealth insinuates that Kotak refused to finance the IPO subscription due to ‘erratic FII movements’ and ‘very high lending rates’, sources told TNIE that the real reason was severe cash crunch with the NBFC. Kotak Wealth Management offers IPO financing services through Kotak Mahindra group’s NBFC arm as banks are not allowed to offer IPO financing services.
BharatPe founder in the legal notice sent to Kotak Mahindra group has alleged that despite having repeatedly assuring him that Nykaa IPO would be allotted to him, on Oct 28 Kotak informed him that it would not be able to provide IPO financing.
The legal notice, which was sent on Oct 30, 2021, demanded that Kotak provide IPO financing for the Nykaa IPO and allocate shares of FSN worth Rs 500 crore to Grover before the closing of the IPO on Nov 1.Though the legal notice did not come in public then, a recent leak of a recorded conversation between Grover and a Kotak Wealth executive, in which the BharatPe founder could be heard hurling abuses, opened the can of worms. Though Ashneer Grover initially denied it was his voice, the controversy took another turn when the legal notice sent to Kotak was leaked to the media on Sunday.
Kotak, which had initially kept mum, had to issue a statement on Sunday admitting that they indeed have received such a notice from Grover and that it had been replied. Kotak also placed on record its objections to inappropriate language used by Grover, and said it is pursuing legal action.