A co-founder of German banking technology provider Solaris is taking legal action against Solaris over its takeover by Japanese financial conglomerate SBI Holdings.
Andreas Bittner, a co-founder of Solaris, which provides white-label financial products, and several other existing Solaris shareholders, have filed legal action with a regional court in Berlin.
The legal action relates to a funding round Solaris undertook of around $150m earlier this year as it faced financial difficulty.
The round was headed by existing Solaris shareholder SBI Holdings, which put in around $100m, and in doing so secured a majority stake of more than 70 per cent in Solaris.
In the complicated funding round, agreed by Solaris management, the value per share of existing Solaris shareholders, including Bittner, plunged from €7,000 to just 10 cents, according to Bittner, with the valuation of Solaris, once valued at €1.6 billion, plummeting to €25,000.
As an incentive for shareholders to greenlight the deal, existing investors would get further compensation if Solaris was sold or listed on the stock exchange, the round dictated.
More than 85 per cent of existing shareholders had to agree to the deal for it to go through, it is understood.
Bittner, a Solaris board member between 2015 and 2020, wants several resolutions at Solaris's AGM, which took place in February year, regarding the rescue funding round declared “null and void”, according to the lawsuit, which was obtained by German Manager Magazin.
"Corporate law prohibits inappropriate special advantages for individual shareholders that are to the detriment of others," said Bittner's lawyer.
One point of contention for Bittner, who co-founded Solaris with Marko Wenthin, is that no third party has confirmed the lowly valuation in the funding round, he says.
He said a more reasonable valuation of Solaris would be around €600m at the time of the funding round.
Other investors in the funding round include The Stuttgart Stock Exchange.
Berlin-based Solaris was once a darling of the European fintech scene.
However, it ran into financial and regulatory trouble.
In 2022, Solaris bagged a decade-long contract to supply credit cards for the German motor association ADAC to its 21 million members.
The deal was expected to boost Solaris’s annual sales by more than €100m. It then sought €100m in funding, the bulk of which was needed to meet regulatory capital requirements from managing ADAC's €500m credit card loan book.
Solaris has also been reprimanded by the German regulator over organisational shortfalls while last year Solaris made a €123m write-off of a business it purchased, called Contis, and made significant job cuts to its 700-strong workforce.
SBI Holdings, one of the largest VC firms in Japan, is the former investment arm of SoftBank which became independent from SoftBank in 2006.
Solaris said: "We emphatically reject the allegations made. The resolutions of the Annual General Meeting were passed in accordance with the rules and with the required majority of shareholders.
"Solaris has always provided shareholders with comprehensive and transparent information about the economic situation and the options available. The measures taken as part of the recapitalization were necessary and were closely coordinated with all parties involved."
Would you like to write the first comment?
Login to post comments