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Investors oust Fundsindia.com co-founders

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Mumbai: A bitter board room battle between private equity investors of Wealth India Financial Services, the firm owning Fundsindia.com — one of the country’s oldest online mutual fund distributors — and its founders has led to the ouster of the latter. Inventus Capital, Foundation Capital and Faering Capital, the firms that hold a majority stake in Wealth India, sacked co-founders CR Chandrashekhar and Sreekanth Meenakshi following differences between them on the way the business was run.

Chandrashekhar was the chief executive officer and Meenakshi was the chief operating officer. The company’s board, led by representatives of the PE firms, appointed its chief technology officer Girirajan Murugan as its CEO and former UTI Mutual Fund’s senior executive Suraj Kaeley as a senior advisor, it said in a statement on Thursday. In response to an ET query, the three PE firms, in a joint statement, said, “The Board of Directors of Wealth India Financial Services comprising representatives from Inventus Capital, Foundation Capital and Faering Capital took the necessary measures related to the employment of the founders of the company after observing certain irregular actions.

The decisions were taken at the board level after substantial deliberations over a period of time.” The company retained Chandrashekar on the board. A few employees including research head Vidya Bala quit the company soon after the founders’ exit, said a person familiar with the matter. “There were differences between the investors and the founders over running of the company and its future growth,” the person said. The dispute stemmed from the investors’ concerns over the slower-than-expected pace of revenue growth.

Mutual fund distributors have taken a hit on their profits because of the growth in direct plans — a cheaper investment route bypassing distributors.

The new expense ratio guidelines by SEBI, has also reduced margins for distributors. “The investors wanted to run it as a pure consumer internet company, while the founders felt a hybrid model will work well,” said another person aware of the dispute. Founders and employees are worried about their stakes in the company as it was agreed that they cannot sell their holdings without the approval of the investors, said the person quoted above.




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