IDFC Bank shareholders reject resolution for Warburg Pincus board seat

IDFC First Bank on Monday disclosed that its shareholders have rejected a special resolution seeking approval for US-based private equity firm Warburg Pincus’s affiliate, Currant Sea Investments B.V., to nominate a non-retiring non-executive director to the bank’s board.

 

The special resolution received 64.1 per cent of the votes, falling short of the required 75 per cent threshold for it to pass.

 

Last month, IDFC First Bank announced that Warburg Pincus LLC and the Abu Dhabi Investment Authority (ADIA) would collectively invest Rs 7,500 crore in the bank through a preferential equity issue to support the lender’s next phase of growth. Warburg Pincus, through its affiliate Currant Sea Investments B.V., will invest Rs 4,876 crore, while ADIA will invest Rs 2,624 crore through its wholly owned subsidiary, Platinum Invictus B 2025 RSC.

 

 

IDFC First Bank’s board had approved the issuance of 1.25 billion fully paid-up compulsorily convertible cumulative preference shares (CCPS), of which 812.69 million will be allotted to Currant Sea Investments B.V. at Rs 60 each. Similarly, 437.18 million CCPS will be allotted to Platinum Invictus B 2025 RSC at the same rate. Currant Sea Investments B.V. will hold 9.48 per cent and Platinum Invictus B 2025 RSC will hold 5.1 per cent of the bank on a post-money basis upon conversion of the CCPS.

 

Following this, the bank sought shareholders’ approval through postal ballot to reclassify its authorised share capital and amend the capital clause of its memorandum of association. Additionally, it sought approval to issue and allot CCPS worth Rs 7,500 crore on a preferential basis, amend its articles of association, and provide Currant Sea Investments B.V. with the right to nominate one non-retiring non-executive director.

 

While the first two resolutions were approved by shareholders, securing 99.61 per cent and 99.18 per cent of votes respectively, the third resolution failed to pass.

 

In the special resolution concerning the board nomination, 76.08 per cent of institutional investors and 27.53 per cent of non-institutional (retail) investors participated. Among non-institutional investors, only 49 per cent of the votes were in favour, while 51 per cent were against. In the case of retail investors, over 98 per cent voted in favour, with a little over 1 per cent against.

 

Overall, 64.10 per cent of the total votes were in favour of the resolution—below the 75 per cent required—while 35.90 per cent were against it.

 

Interestingly, proxy advisory firm Institutional Investor Advisory Services (IiAS) had recommended voting against the resolution.

 

“There is no minimum shareholding threshold; even at below 10 per cent shareholding, Currant Sea Investments B.V. have a right to a board seat. We do not support board nomination rights without an embedded minimum shareholding threshold of at least 10 per cent,” IiAS said.

 

“We also do not support committee nomination rights—since the determination of committee composition is the board’s prerogative and must be decided by the board independently. We do not support the resolution. IiAS recommends voting against the resolution,” it added.