After months of fighting, microfinance major Spandana Sphoorty Financial has entered into a settlement with its promoter and founder managing director Padmaja Gangireddy.
The board of the microfinance company and its subsidiaries — Criss Financial Limited and Caspian Financial Services Limited — have approved a settlement agreement resolving all pending disputes, Spandana Sphoorty said in a regulatory filing on Wednesday.
With this, shares of the non-bank lender rose 19 percent intraday on Thursday. At 12:42 IST, the scrip was up 16.5 percent at Rs 388 on the BSE. The stock has fallen 12.80 percent year-to-date.
Gangireddy holds a 17 percent stake in Spandana Sphoorty, while Kedaara has 45 percent.
How is Axis Bank linked?
Gangireddy resigned from the microfinance lender on November 2, 2021, following differences with private equity investor Kedaara Capital over the company’s proposed sale to Axis Bank.
The Gangireddy-Spandana dispute came on the heels of another investor and founder disagreement that had erupted between promoters of Zee Entertainment and one of its biggest foreign investors, Invesco, last year.
Gangireddy opposed the sale
In an email to the board and employees, Gangireddy had said she was forced to resign as she had objected to Kedaara’s attempt to sell Spandana Sphoorty at a depressed valuation to Axis Bank.
“I opposed underselling of the company to Axis Bank at a throwaway price,” she wrote in the email. She had said that Kedaara agreed to sell Spandana Sphoorty at 1.6x BV (book value) multiples, while other MFIs were acquired at 4.75x and 3.5x.
Following her resignation, disputes arose between her and the board of Spandana Sphoorty.
But resolving all issues, on June 22, Spandana Sphoorty said Gangireddy would no longer serve as the MD of the company. A joint statement says the company and Gangireddy have resolved their differences and agreed to part ways "on amicable terms".
She would, however, continue as a member of the company's board and a substantial shareholder.
The other investor-promoter dispute
On September 11, Invesco had insisted that Zee call an "extraordinary general meeting" of shareholders to consider its demands, which included appointing six new independent board members and ousting Zee's CEO Punit Goenka.
Zee rejected Invesco's demand to revamp the board and announced it was in talks with Sony for a merger. The Indian entertainment giant said the new deal terms would have Goenka continuing as the CEO of the merged entity, in which Sony will have a majority stake.
In March this year, Invesco said it backed Zee’s merger with Sony and had decided not to pursue its requisition for an EGM to remove Goenka.