Lloyds Bank's £125 million acquisition of Curve is facing a legal challenge from the London-based fintech's largest investor.
Lloyds moved to close the deal for Curve - which operates a digital wallet that brings all cards and alternative payment sources into one secure platform while adding money-saving and loyalty features - last week.
The sale price represents only about half of the total funding raised by Curve since the company was created a decade ago and remains light years away from the $50-$60 billion prospective valuation promised by management at the height of the fintech boom years.
Now IDC Ventures, Curve's largest external investor with 12% of the shares, has issued a petition in the High Court seeking to overturn the agreement.
In a statement, IDC says the petition "alleges serious failures by key directors and investors," including Curve’s CEO Shachar Bialick and chairman Lord Stanley Fink.
These failures "have undermined shareholder rights, concealed material information and enabled Hanaco [another major Curve shareholder] to secure disproportionate economic rights and voting control at the expense of other shareholders," claims IDC.
Continues the statement: "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 also takes aim at Lloyds, stating that it is "surprising and deeply concerning" that the bank pushed ahead with the deal against its objections.
Concludes IDC: "The conduct of Hanaco and failures by the key directors have caused financial distress and dramatically undermined the company’s position, destroyed hundreds of millions in value, and left Lloyds as the only bidder at a drastically reduced price. IDC believes that over £670 million of shareholder value has been wiped out as a direct result of these actions."
Curve and Lloyds have not commented on the legal challenge.