IDFC FIRST Bank Shareholders Reject Warburg Pincus Board Seat, Deal Hits Roadblock
Only 64.1% of shareholders voted in favour of the appointment, falling short of the 75% threshold required for approval.
In a significant development at IDFC First Bank Ltd.'s recent shareholder meeting, the proposal to induct a non-retiring board member from Currant Sea Investments—a Warburg Pincus affiliate—failed to secure the necessary majority vote, the bank informed exchanges on Monday.
Only 64.1% of shareholders voted in favour of the appointment, falling short of the 75% threshold required for approval.
This setback casts uncertainty over the planned strategic investment, as Warburg Pincus and the Abu Dhabi Investment Authority had agreed to jointly invest Rs 7,500 crore through their affiliates in the bank last month.
The rejection of the board seat indicates shareholder apprehension about the terms or implications of the deal, potentially delaying the capital infusion from both marquee global investors.
On April 17, the board of IDFC FIRST Bank had approved raising up to Rs 7,500 crore from two investors by way of issuing compulsorily convertible preference shares.
The two investors include Currant Sea Investments BV, an affiliate of Warburg Pincus, and Platinum Invictus, an affiliate of ADIA.
The bank had said that it will allot 81.26 crore and 43.71 crore compulsorily convertible preferential shares at Rs 60 apiece each to both marquee investors, Currant Sea and Platinum Invictus, respectively.
While Currant Sea will invest Rs 4,876 crore, Platinum Invictus will park Rs 2,624 crore in the bank. Post the transaction, Currant Sea will hold a 9.48% stake in the bank, and Platinum Invictus will own a 5.10% stake in the bank.
The preferential issue is subject to the approval of the shareholders, Reserve Bank of India and Competition Commission of India, as may be required.
The rationale behind this fundraising is that the bank plans to scale up its optimal profitability and aims to grow the overall loan book at 20% for the next few years and as it will also increase the capital adequacy of the bank.
Post this fundraising, the bank's capital adequacy ratio could improve to 18.9% from 16.1% currently.
