Shareholders say FNZ deal terms could erase equity if firm is valued below US$8.3 billion in IPO or sale
Employee shareholders at FNZ say their equity could be wiped out if the firm’s value drops below US$8.3bn in a future sale or IPO — a claim now at the centre of a US$4.6bn lawsuit filed in New Zealand.
Reuters reported that Kiwi CayLP, a trustee representing class B shareholders, said FNZ unfairly transferred US$1.5bn in value to institutional investors by issuing preference shares and warrants during capital-raising rounds in 2024 and 2025.
The lawsuit, filed Friday at the High Court of New Zealand’s Wellington Registry, targets FNZ and 17 current and former directors, including CEO Blythe Masters.
The claimants allege the new equity was issued on non-commercial terms, favouring institutions such as Caisse de dépôt et placement du Québec (CDPQ), Singapore’s Temasek Holdings Pte., and Motive Partners LLC.
The issuance, which reportedly offered returns of up to 300 percent, diluted the holdings of FNZ’s employee shareholders.
As reported by Reuters, the claim argues that class B shares held by employees had an estimated value of $4.6bn prior to the capital raises.
If FNZ is later valued below $8.3bn in a transaction, the equity of these shareholders could drop to zero, according to Kiwi CayLP.
Kiwi CayLP stated that the transactions were approved by FNZ directors who “carried significant conflicts of interest” due to their roles as employees and as representatives of the very institutions that benefited from the share issuances.
The suit outlines 16 alleged breaches of New Zealand corporate law, including acting oppressively, neglecting fiduciary duties, and misusing directorial power.
FNZ responded in a statement that it “considers [the claim] to be entirely without merit” and expressed confidence that its directors “have at all times acted in the best interests of the company, its clients, employees and all stakeholders.”
The company also said that institutional shareholder investments reflected “a strong commitment to the company’s long-term growth and success.”
The employee shareholders are seeking to have FNZ or the named directors acquire their shares based on the valuation prior to the disputed capital raisings.
They have also challenged FNZ’s amendment of its constitution, which they claim removed the obligation to issue new equity at fair market value.
As reported by Bloomberg, FNZ’s ownership structure includes CDPQ, Temasek, and Generation Investment Management, which collectively hold about 66 percent.
Motive Partners and CPPIB hold an additional 6 percent. Roughly 28 percent is controlled by current and former employees, including founder Adrian Durham, according to S&P Global.
FNZ, founded in 2003 and headquartered in London, provides automation and transaction services to firms managing more than $1.7tn in assets.
The company has grown through acquisitions across Europe and the US and employs about 7,000 people globally, including operations in Canada.
FNZ’s website indicates more than 3,000 employee shareholders are involved.
The lawsuit presents a challenge for Masters, who was appointed CEO in August and is a founding partner at New York-based Motive Partners, which has held a stake in FNZ since 2022.
Temasek declined to comment on the lawsuit, while CDPQ and Motive Partners did not respond to requests for comment, as reported by Bloomberg.
CPPIB also declined to comment.
Nina Ferris, head of commercial dispute resolution at Hill Dickinson LLP, told Bloomberg that such shareholder lawsuits are increasing in the UK and US.
She said the burden lies on “the claimant to be able to show that this conduct has actually happened, that it’s prejudicial to the interests of the minority and that it’s unfair.”
