Private equity firm Warburg Pincus has suffered a setback in its attempt to nominate a representative to the board of IDFC First Bank, a month after agreeing to invest Rs 4,876 crore ($571 million at current exchange rates) in the lender.
IDFC First Bank’s shareholders have rejected a proposal to give Warburg the right to nominate a non-retiring, non-executive director to the board, the lender disclosed in a stock exchange filing on Monday.
According to the filing, only 64.1% of the bank’s shareholders voted in favour of the proposal, less than the 75% threshold required for approval.
The development is a setback for Warburg, as it is planning to acquire a 10% stake in the private-sector bank. Earlier this month, Warburg sought approval from the Competition Commission of India to acquire this stake.
In April, IDFC First Bank announced that Warburg Pincus and Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund of the Gulf Emirate, would invest a total of Rs 7,500 crore in the lender. The bank said that its board approved a preferential issue of shares amounting to around Rs 4,876 crore to Warburg Pincus and Rs 2,624 crore to ADIA.
The bank said at the time that the fundraise would help drive its next phase of growth and strengthen its balance sheet. The investment marks Warburg’s return into IDFC First Bank’s cap table after it exited in 2024.
On Monday, IDFC First Bank also said that its shareholders have approved the issuance of compulsorily convertible cumulative preference shares on a preferential basis. In addition, the shareholders approved the re-classification of authorised share capital and an amendment in the capital clause of the memorandum of association of the bank.
IDFC First Bank’s board is led by independent director and non-executive chairperson Sanjeeb Chaudhuri. The board also includes managing director and CEO V. Vaidyanathan, executive director Pradeep Natarajan and seven other independent directors.
