The biggest external investor in Curve, the digital wallet provider, has filed a legal challenge aimed at overturning its £125m sale to Lloyds Banking Group.
Sky News has learnt that IDC Ventures issued a petition in the High Court on Friday seeking to overturn the deal, which was formally announced by Britain’s biggest high street lender following months of negotiations.
The legal claim alleges “serious failures by key directors and investors”, including Curve founder and chief executive Shachar Bialick, and chairman Lord Fink.
In it, IDC alleges that directors and Hanaco, another major Curve shareholder, had “undermined shareholder rights, concealed material information and enabled Hanaco to secure disproportionate economic rights and voting control at the expense of other shareholders”, according to a statement issued by IDC to Sky News on Friday afternoon.
It is the latest salvo in an escalating row between IDC Ventures and Curve, which Mr Bialick once predicted would attain a valuation of at least $50bn by the end of the decade.
Sky News has previously reported that the distribution of the sale proceeds had sparked a major conflict between some of Curve’s investors, with IDC Ventures’ legal filing alleging that it had unjustly lost out.
Sources said the deal involved a headline price of roughly £110m, with an earnout valued at about £15m on top of that sum.
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“The claim sets out the intentional concealment of material information by certain parties from the board and shareholders, combined with breaches of contract and directors’ duties, which caused financial distress that was then used to force through a highly favourable restructuring of voting rights in favour of Hanaco and directors aligned with it, to the detriment of other shareholders,” IDC said in its statement.
The furious shareholder said it did not believe the transaction was capable of being implemented without its support, and expressed surprise that “Lloyds, a major UK institution, would choose to proceed with a transaction conducted under such circumstances and against the express objections of significant shareholders”.
“IDC believes that over £670m of shareholder value has been wiped out as a direct result of these actions.
“In IDC’s view, no responsible purchaser could have overlooked these red flags, and Lloyds must have understood that it was benefitting from a valuation severely depressed by governance failures,” it added.
“Lloyds was notified in writing of the governance concerns, the disputed decision-making process and the issues surrounding Hanaco’s purported voting rights, yet it chose to simply ignore them and proceed with the transaction without regard to the legal dispute.”
Lloyds said earlier this week that the acquisition of Curve would allow it to offer its 28 million customers “an enhanced payments experience within mobile banking”.
IDC holds a 12% stake in Curve, having initially invested in it six years ago.
It recently failed in an attempt to remove Lord Fink, the former Man Group boss, and Mr Bialick as directors of the company.
Mr Bialick has previously acknowledged that the sale price was disappointing and warned the company would probably run out of money this year unless a sale to Lloyds was agreed.
In total, Curve is understood to have raised at least £250m in funding since it was established.
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Curve did not respond to an emailed request for comment on Friday, while Lloyds has also been contacted for comment.
