US company Apollo Global Management Inc. has followed in the footsteps of Amazon.com Inc in deciding to sue the Future Group in which it owns a substantial stake, over its right to vote in company matters as a shareholder.
Even though Future Group on Monday dropped the controversial plan to sell one of its publicly traded firm, the fact that Apollo’s protests against it was dismissed by the former’s board during discussion, was reason enough for the American company to move court in a bid to secure its rights as a shareholder.
Also read: Reliance-Future Group deal off as creditors vote against scheme
Both Amazon and Apollo had made investments in the private ventures of Kishore Biyani. While Amazon had purchased stocks worth $192 million in Biyani’s gift voucher unit as part of an agreement that the latter invests in the e-commerce company’s retail business, Apollo had given a loan of $200 million to some of Biyani’s holding companies.
Tragedy struck, when Biyani, battered by COVID losses and curbs on foreign trade during the pandemic, bypassed Amazon to sell his flagship unit Future Retail Ltd to Mukesh Ambani’s Reliance Industries Ltd.
Reliance took hold of Biyani’s retail stores on lease even though the legal dispute of Biyani with Amazon pushed the $3.4 billion sale to the backburner. The jolt came for Amazon when India’s Antitrust Authority stripped it off its earlier approval to invest in Biyani’s gift voucher unit and fined the Seattle-based company for allegedly not revealing its true intention of using coupons as way to get hold of Fortune’s retail sector.
As far as Apollo is concerned, it had acquired shares in Biyani Group’s publicly-traded firm Future Supply Chain Solutions Ltd in lieu of its loan to the company. The US-based company had become a 24.8 per cent shareholder in Future Group by using the pledged shares when the loan was not paid. However, when Supply Chain urged shareholders to sell, transfer or dispose the firm’s assets in a bid to sell it, Apollo’s denial to the terms were not approved by the board of directors.
Also read: Future Group is the loser in Amazon’s spat with Reliance
Reports say the management of Supply Chain doesn’t believe Apollo has voting rights on pledged shares transferred to its name and thus didn’t take its views seriously. It has been reported that the buyout firm is now mulling legal action against the snub. Experts also say that telling creditors that stock pledged to them doesn’t come with voting rights could hurt genuine borrowers in the future and dent the spirit of India’s financing-against-shares market.