IDFC First Bank announced on Monday that its shareholders had rejected a special resolution requesting that US-based private equity firm Warburg Pincus' affiliate, Currant Sea Investments B.V., nominate a non-retiring non-executive director to the bank's board.
The special resolution received 64.1% of the vote, falling short of the required 75% threshold for passage.
Last month, IDFC First Bank announced that Warburg Pincus LLC and the Abu Dhabi Investment Authority (ADIA) would invest Rs7,500 crore in the bank through a preferential equity offering to support the lender's next phase of expansion. Warburg Pincus, through its affiliate Currant Sea Investments B.V., will invest Rs4,876 crore, while ADIA will invest Rs2,624 crore through its wholly owned subsidiary Platinum Invictus B 2025 RSC.
The board of IDFC First Bank approved the issuance of 1.25 billion fully paid-up compulsorily convertible cumulative preference shares (CCPS), 812.69 million of which will be allotted to Currant Sea Investments B.V. at Rs 60 each. Similarly, Platinum Invictus B 2025 RSC will receive 437.18 million CCPS at the same rate. Currant Sea Investments B.V. will own 9.48 percent of the bank, while Platinum Invictus B 2025 RSC will own 5.1% after the CCPS is converted.
Following that, the bank requested shareholder approval via postal ballot to reclassify its authorised share capital and amend the capital clause of its memorandum of association. It also sought approval to issue and allot CCPS worth Rs 7,500 crore on a preferential basis, amend its articles of association, and grant Currant Sea Investments B.V. the right to nominate one non-retiring non-executive director.
While shareholders approved the first two resolutions with 99.61 percent and 99.18 percent of the votes, the third resolution failed to pass.
In the special resolution on board nominations, 76.08 percent of institutional investors and 27.53 percent of non-institutional (retail) investors voted. Non-institutional investors voted 49 percent in favor and 51 percent against. In the case of retail investors, more than 98% voted in favor, with just over 1% voting against.
Overall, 64.10 percent of total votes were in favor of the resolution, which was less than the required 75 percent, while 35.90 percent were against it.
Interestingly, proxy advisory firm Institutional Investor Advisory Services (IiAS) advised voting against the resolution.
"There is no minimum shareholding threshold; even with less than 10% shareholding, Currant Sea Investments B.V. has a right to a board seat. We do not support board nomination rights without a minimum shareholding threshold of at least 10%," IiAS stated.
"We also oppose committee nomination rights—because determining committee composition is the board's prerogative and must be done independently. We do not support the resolution. "IiAS recommends voting against the resolution," it said.
