IDFC Bank Shareholders Decline Board Seat To Warburg Pincus’ Currant Sea Investments

IDFC Bank Shareholders Decline Board Seat To Warburg Pincus’ Currant Sea Investments

However, they approve the issuance of compulsorily convertible preference shares and re-classification of authorized share capital

IDFC First Bank’s shareholders have rejected the proposal to allow Currant Sea Investments BV, the affiliate of global private equity firm Warburg Pincus LLC, to nominate a non-executive director on the board.

Recently, the bank’s board approved a preferential equity issue of Rs.4,876 crore to Currant Sea. It then sought shareholders' consent (through postal ballot) to amend the Articles of Association of the bank. They were to approve the right to Currant Sea (or its assignees) to nominate one non-retiring non-executive director as a special resolution.

However, the postal ballot disclosed to the stock exchanges that only 64.10 percent of the votes were cast in favor of the resolution, while 35.90 percent opposed it.

In a Bombay Stock Exchange (BSE) filing, IDFC stated, “The special resolution has not been passed due to lack of requisite majority.”

Under the Companies Act, a special resolution is passed if it gets at least 75 percent favorable votes.

In this case, the votes were cast by 76.08 percent institutional investors and 27.53 percent by non-institutional or retail investors.

While 51.30 percent institutional investors voted against the resolution, 48.7 percent were in favor of the appointment of a director by Currant Sea. Similarly, 98.67 per cent of non-institutional or retail investor votes were in favor, 1.33 percent were against it.

Meanwhile, the bank's shareholders have approved the other two resolutions through the postal ballot.

One pertained to a special resolution to issue, offer and allot compulsorily convertible cumulative preference shares of Rs.7,500 crore. These were on a preferential basis to be compulsorily converted to equity shares. It was passed with 99.18 percent of the votes.

The second was an ordinary resolution to re-classify authorised share capital of the bank and consequent amendment in the capital clause of the bank’s Memorandum of Association. This had 99.61 percent votes.

Recently, Warburg Pincus, through its arm Currant Sea, sought the approval of the Competition Commission of India (CCI) to acquire a 9.99 percent stake in IDFC Bank by subscribing to over 81.26 crore compulsorily convertible cumulative preference shares.