IDFC First Bank In Talks To Allay Investor Concerns Over Warburg Pincus Board Seat — Profit Exclusive

IDFC First Bank is in talks with domestic institutional investors to allay any concerns over the appointment of a "non-retiring" director from Warburg Pincus on their board. According to people in the know, conversations with domestic institutional investors have already begun.

On Monday institutional investors voted against a proposal to appoint a non-retiring, non-executive representative from Currant Sea Investments on IDFC First Bank's board. Currant Sea Investments is an affiliate of Warburg Pincus. The resolution also sought to amend the articles of association of the bank.

Of the nearly 250 crore votes from public institutional investors polled, over 51% voted against the proposal. This led to the final tally of only 64.1% of votes coming in favour of the proposal. A special proposal requires at least 75% of votes in favour for it to pass muster.

It is unusual that investors of a major lender vote against the appointment of a director. The last time this happened was at Housing Development Finance Corporation in 2018, when investors voted against the appointment of Deepak Parekh to the board as a non-executive director.

According to the people quoted above, it is customary for an investor with over a 10% stake to get a seat on the bank's board. On April 17, IDFC First Bank announced that it was raising Rs 7,500 crore from two investors, Currant Sea Investments (Warburg Pincus) and Platinum Invictus B (Abu Dhabi Investment Authority). This would be done through the issuance of compulsorily convertible preference shares at Rs 60 a share.

Currant Sea Investments would hold 9.48%, and Platinum Invictus B would hold 5.1% of the bank on a post-money basis on conversion of CCPS.

The bank is confident of working through appointment of Warburg Pincus representative on board, the lender said in a statement to the exchanges. "We are confident of working through this matter, and we are also proceeding with seeking other remaining regulatory approvals in parallel," it said.

Once the domestic investors have been taken into confidence, another vote would be called for a similar appointment. It is not clear what the final board resolution would look like or which investors would be asked to vote on.