Global financial technology giant, FNZ, has added fuel to a smouldering legal fire after raising US$500 million from institutional shareholders last week.
An unnamed local FNZ staff member told BusinessDesk that the latest move would “further exacerbate” a legal conflict launched by disgruntled staff-shareholders this March following a series of dilutive capital-raises by the group’s institutional shareholders.
“The relationship between the new management and key long-serving staff has broken down, and it’s getting worse every day this goes on,” the FNZ employee told BusinessDesk.
“If it goes to court, it is in nobody’s interests and would be a long drawn-out process which would be terminal for the company.”
According to a mid-March report by UK financial industry publication Citywire, a group of 215 employee-shareholders signed a letter protesting a US$1 billion preference share issue to institutional investors last August that could dilute ordinary staff ‘class B’ stock-owners to the tune of US$3 billion.
The preference share deal included terms guaranteeing returns to institutional investors of two- to three-times over a two-year period, Citywire reported.
Employee-shareholders allege in a letter than they could see another US$1.5 billion dilution after the most recent equity top-up by FNZ institutional owners.
The company was valued at about NZ$3.45 billion in a 2018 deal, rising to US$20 billion in 2022 as new shareholders came aboard. FNZ did not supply an implied valuation in the latest capital-raising round.
From its genesis inside First NZ Capital (now Jarden) in 2003, FNZ has developed into to global behemoth, last reporting about US$1.7 trillion in funds under administration across more than 650 financial institutions, 12,000 wealth managers and over 24 million end-users.
Institutional FNZ shareholders comprise two Canadian pension schemes – CPP and Caisse de Depot et Placement du Quebec (CPDQ) – as well as the Al Gore-run Generation Investment Management, Motive Partners, Temasek and Summit Partners. CPDQ owns about 45 per cent of the company.
BusinessDesk noted that the FNZ staff group had hired Meredith Connell to pursue a court case against the company and directors, alleging behaviour “oppressive, unfairly discriminatory and/or unfairly prejudicial to the shareholders”.
“We cannot stand by and allow what we consider to be an unjust wealth transfer from us ordinary employees who built FNZ to institutional investors, including some of the world’s largest sovereign wealth funds and private equity firms,” the staff-shareholders said in a statement.
FNZ declined to comment.
The Wellington-originated company embarked on a significant capital and executive overhaul last year, rearranging US$2.1 billion of debt while institutional shareholders tipped in an almost US$320 million loan in addition to the now US$1.5 billion equity top-up.
At the same time, Blythe Masters – a Motive partner – replaced founder, Adrian Durham, as chief, triggering a string of executive appointments in subsequent months.
The NZ-domiciled company filed a directors’ certificate last week confirming the issue of 14,044 warrants (dubbed ‘Fiat III Warrants’) to facilitate the new preference shares for the A-class institutional owners.
According to the certificate, the “directors of the Company who voted in favour” approved the resolution on April 6.
“In our opinion, the 2025 Warrant Consideration, the Terms of Fiat III Warrant Issue, and the Fiat III Warrant Exercise Price are fair and reasonable to the Company and to all existing shareholders of the Company,” the note says.
The filing shows 10 of the 14 FNZ directors signed the certificate: the two NZ-based board members – Charlie Trotter and Charlotte Boyer – along with Durham and independent director, Antonio Lorenzo, were not signatories.
FNZ also published a revised constitution earlier in April, showcasing a Cat-in-the-Hat equity arrangement stretching from Shareholder A right through to Shareholder H.