According to multiple sources briefed on the matter, Trell, the cash-strapped social commerce platform currently under investigation for alleged financial irregularities, has sold a 10 percent stake in AppsForBharat to one of its existing investors, Mirae Asset.
According to one of the sources, a secondary transaction worth $9-9.5 million also occurred, in which the Middle East investment fund MSA Novo acquired AppsForBharat shares from the influencer-driven video and shopping app, AppsForBharat.
Mirae Asset, a South Korean investment company, owns nearly 11 percent of Trell. When it comes to AppsForBharat, MSA Novo has acquired a 2 percent stake, with the company also having acquired an additional 7-8 percent stake in the company. According to a source familiar with the situation, the transaction represents Trell’s attempt to stay afloat despite the fact that the company has laid off 200-300 employees.
As previously stated, “it was primarily Mirae that selected the stake, as the fund has been in discussions to acquire a stake in AppsForBharat for some time now…but things moved quickly given Trell’s dire situation,” according to a person familiar with the situation. Sources said it was preferable for Mirae to make an investment in AppsForBharat and thus be able to give some cash to Trell rather than take a risk on a new venture.
A Trell spokesperson told ET on Monday that the “divestment was always the plan because it was non-core.”
The forensic team at EY India is looking into allegations of related-party transactions, incorrect business number reporting, and other financial irregularities in Trell.
On March 12, the Associated Press published the first report on an ongoing investigation into the company’s financial records.
Prashant Sachan, one of the Trell founders, went on to found AppsForBharat, a product studio that specialises in spiritual and devotional content for the Hindu community. Sequoia Capital, Elevation Capital, and Matrix Partners are among the investors who have backed the company. According to a report published on March 21 by ET, Sachan exited Trell last year and liquidated his entire stake.
So, when exactly did the squabble begin?
A new round of funding was discussed last year, and Trell even received a term sheet from Bestseller India, which owns brands such as Vero Moda, Jack & Jones, and Only. Bestseller India valued Trell at $750 million, up from $120 million just a few months earlier. Trell is now valued at $750 million. Bestseller A/S is a privately held and family-owned clothing company based in Copenhagen, Denmark. A whistleblower raised concerns about alleged financial misappropriation at the Bengaluru-based startup, which was backed by Sequoia Capital, prompting the company to halt the deal. And Sequoia Capital, which is a shareholder in both Trell and AppsForBharat, was the one who sparked the investigation.
As reported by the Economic Times on March 21, Trell’s cofounder Pulkit Agrawal claimed that the investigation had been triggered by one or two investors and had not been approved by the company’s board of directors.
However, according to a source with knowledge of the situation, the company is now cooperating with investigators in the investigation. As a result of the agreement, Trell and its investors are cooperating with Agarwal on the investigation and its outcome, the source said.
There are no distinctions between the founders of the company and those who invest in it, according to a spokesperson for Trell Capital. Their commitment to the company remains unwavering, and they have complete faith in the company’s founders and leadership.
After being questioned about the EY India investigation, the company’s representative stated that the company conducted a “standard review” without providing specifics and that it was “standard practise” for businesses to review their business controls and “tighten the system and processes.” Your questions are therefore without foundation as a result,” the individual continued.
A related party transaction investigation was carried out by EY, according to sources familiar with the matter. Using bots, they claimed, Trell was inflating its revenue and gross merchandise value (GMV) numbers by 30 percent to 40 percent, and that it was inflating its DAU (daily active users) and MAU (monthly active users) numbers by 30 percent to 40 percent.
The company categorically denied the claim. “Wrong. We at Trell believe that authentic user onboarding and engagement are essential. There are numerous inaccuracies in the figures provided. “However, we are unable to share proprietary company information,” a spokesperson stated.
By Monday afternoon, emails sent to Mirae, Sequoia Capital, MSA Novo, and Bestseller India had gone unanswered despite repeated attempts. As a result of the transaction, Sachan, the founder of AppsForBharat, has confirmed that he is no longer associated with Trell and that he sold his stake in the company last year.
Published By:Â JAINAM SHETH
Edited By : KRITIKA KASHYAP
