FNZ faces US$4.6-billion legal claim for allegedly diluting shareholding of employee investors
FNZ Group Limited said the recent multi-billion-dollar legal action filed by employee shareholders is "entirely without merit."
A spokesperson from FNZ told HRD that they are confident the directors acted in the best interests of the company.
"FNZ notes the claim filed in New Zealand and considers it to be entirely without merit. We are confident that our directors have at all times acted in the best interests of the company, its clients, employees and all stakeholders," the spokesperson said.
"The investments by FNZ's institutional shareholders reflect a strong commitment to the company's long-term growth and success, an outcome that can only be in the best interests of all its stakeholders."
Multi-billion legal claim against FNZ
The statement is a response to a recent US$4.6-billion legal claim filed by Kiwi CayLP, a trustee entity representing a significant proportion of employee equity, in the High Court of New Zealand.
The claim alleges that FNZ, along with 17 current and former directors, breached the New Zealand Companies Act 1993.
The entity alleges that employee shareholders have been prejudiced by the dilution of their shareholding through FNZ's issuance of preference shares and warrants on non-commercial terms during 2024 and 2025.
According to the filing, the transactions were approved by FNZ directors who allegedly had conflicts of interest, as they were also employees or directors of the institutional and private equity investors who benefitted from the arrangements.
Diluted shareholder value
Kiwi CayLP claims that the estimated value of the shares held by Class B shareholders, who represented 23% of the total equity, was approximately USD$4.6 billion.
However, the transactions allegedly enabled a select group of institutional and private equity investors to obtain a three-times return on their new capital, in preference to employee shareholders.
The claim further alleges that the transactions resulted in the immediate transfer of more than USD$1.5 billion in value from employee shareholders to the institutional and private equity investors involved, beyond the capital raised.
It also asserts that, under the terms of the deals, employee equity would be entirely wiped out in the event of a sale or IPO if FNZ were valued at less than USD$8.3 billion.
