Curve shareholder IDC Ventures files legal challenge to block sale to Lloyds - report

(Sharecast News) - Curve's biggest external investor - IDC Ventures - has reportedly filed a legal challenge aimed at overturning the digital wallet provider's sale to Lloyds Banking Group. According to Sky News, IDC Ventures issued a petition in the High Court on Friday seeking to overturn the deal, which was formally announced earlier this week.

Sky said 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.

Sky 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 told Sky the deal involved a headline price of roughly £110m, with an earnout valued at about £15m on top of that sum.

"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 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."