Caisse and CPPIB tied to legal threat as FNZ employee investors challenge capital raise terms
Minority shareholders in FNZ Group have accused the New Zealand-based financial software provider of unfairly diluting their stakes through recent capital raises.
They plan to launch a class action against the company and its largest shareholders, including two Canadian pension funds, according to The Globe and Mail.
The conflict centres on FNZ’s fundraising efforts totalling about US$1.5bn, which supported the company’s expansion into Europe, North America, and Asia.
In April 2024, FNZ secured $459m through a debt facility. Five months later, the company raised an additional $966m by issuing preference shares.
These shares granted large investors a three-times preferred rate of return over three years, an 18 percent annual dividend, and additional warrants, as per legal letters cited by The Globe and Mail.
The Caisse de dépôt et placement du Québec, which manages $473bn for pension and insurance funds, first invested in FNZ in 2018 and remains the largest shareholder.
In 2022, the $700bn Canada Pension Plan Investment Board (CPPIB), responsible for the pensions of 22 million Canadians, invested US$1.1bn near the peak of FNZ’s valuation.
The company has not released a revised valuation since then, despite changing market conditions and interest rates.
The Caisse’s and CPPIB’s ownership stakes remain undisclosed.
FNZ serves approximately 650 financial institutions—including banks and insurers—that manage $1.7tn in assets for 26 million wealth management clients.
Its Canadian presence grew recently through a multiyear partnership with the Bank of Montreal to modernize the bank’s digital systems for its private wealth and investing clients.
According to the shareholder group’s legal team, the preference share terms were “plainly uncommercial” and aimed to maximise returns for large investors.
The group consists of roughly 200 class B shareholders, many of whom are current or former employees. They allege that their class B common shares were diluted by more than US$3bn.
In a March letter, their lawyers claimed, “the board of FNZ appears to have enriched its own interests at the expense of minority, unrepresented shareholders.”
Although they have not filed a formal complaint yet, the group stated it would proceed with a class action in a New Zealand court by the end of May.
They claim institutional investors who participated in the preference share deals—such as the Caisse, CPPIB, Singapore-based Temasek Holdings Ltd., and US-based Motive Partners—could be liable for as much as US$6bn.
In response, FNZ lawyers argued that the shareholders’ allegations are “simplistic and inaccurate.”
They defended the fundraising decisions, stating FNZ pursued “the only viable options available” and that the capital was “absolutely necessary and critical” to the company’s survival.
They added, “The alternative to raising new capital was potentially catastrophic to all shareholders.”
According to the lawyers, FNZ’s board, which included founder and then-CEO Adrian Durham, unanimously approved both 2024 capital raises.
Durham stepped down from the CEO role last year and took on a board and advisory position.
Blythe Masters, a financial executive, succeeded him as CEO, and Roman Regelman became president.
Both are “industry partners” at Motive Partners, which has a seat on FNZ’s board.
The shareholder group received “catch-up rights,” giving them a chance to purchase the new preference shares on the same terms.
However, the lawyers described the offer as meaningless because “most employee shareholders do not have the means to subscribe on the terms offered.”
Regelman disagreed, stating, “when the company grows, the shareholders, institutional and individual, benefit.”
He added, “The five institutional shareholders, employee shareholders, all have equal rights, equal participation, and all institutional shareholders have participated. I think that’s a very important point on fairness, on equity.”
Despite management’s assertions, a spokesperson for the shareholder group said in an emailed statement that “management provided a response through their external legal counsel, which denied all of our claims and concerns.”
The spokesperson added that the reply lacked substance and described it as “a continuation of the inadequate engagement we’ve experienced with management from the outset.”
FNZ said the fundraising aligned with a business plan intended to enhance cash flow and long-term profitability.
“That capital provides financial strength. That capital allows us to service our clients. This capital benefits, directly or indirectly, our employees,” said Regelman.
He added that their mission is to deliver results for institutional shareholders and said they are “very proud… to have these institutions among our backers.”
The shareholder group continues to dispute the fairness of the raises. In a recent legal letter, they claimed the US$500m FNZ raised in April 2025 “will further dilute” their holdings.
“The real basis for this move is unclear,” they stated. “It can’t be an emergency, otherwise that would mean the board has presided over emergency funding, on unreasonable terms, in May, 2024, August, 2024 and now April, 2025.”
FNZ’s lawyers acknowledged the dilutive impact of capital raises for those who did not participate, but insisted the actions were taken “in the best interest of all shareholders.”
They wrote, “That does not make a capital raise, undertaken to ensure the survival of the Company, unfairly prejudicial.”
A spokesperson for the Caisse declined to comment on the potential legal proceedings.
CPPIB also declined to comment.
The class B shareholder group stated it would ask the court to include certain institutional investors in the class action, alleging they “stood to gain from the conduct of their board representatives” and should “be ordered to make good to the shareholders.”
