‘Gun at their head’: Xinja shareholders call for more options
Xinja shareholders have banded together to put pressure on the board to retain its banking license and overhaul the leadership of the ailing startup ahead of a shareholder meeting this week.
The fallen neobank has asked shareholders to vote on two options for the future of the company in a non-binding poll on Wednesday – wind up and expect nothing back or pay more and launch new products, such as a US share trading platform.
Investors who own more than 20 per cent of Xinja’s shares are now calling for a third option that includes retaining the company’s banking license, raising more capital and flushing out the board.
Xinja shareholders feel like they have a “gun to their head”. Credit:
Xinja surprised shareholders and customers in December when it announced plans to exit banking and has since become the first Australian bank to return all its customers deposits.
The shareholder push is being led by two little-known investors, Mackellar Capital International and Singapore-based Jade Minerals Investments, who own 1 per cent and 16.5 per cent of Xinja’s stock respectively.
Mackellar Capital has invested around $3 million in Xinja and its chief risk officer Michael Lynch said he was “shocked” when the company abruptly announced it would return its banking license.
“The license is the most valuable asset the bank has,” Mr Lynch said.
The investors have now launched a website called Xinja Action Group calling on shareholders to boycott the online poll and demand the company “work hard” to retain the banking license.
Mr Lynch said he was aware of new investors who are keen to provide additional capital but added the company would need to be restructured.
“This presents an opportunity to refresh the board and management team with industry recognised executives in the financial services sector,” he said.
Xinja said it had not received a recapitalisation proposal from either MacKellar Capital or Jade Minerals.
“Xinja very much welcomes, and is willing to consider and fully explore, all recapitalisation proposals, however the retention of its banking license following the return of deposit process is not a feasible option for Xinja at this point in time,” a spokesman said.
Public relations specialist Tim Allerton, who represents five major shareholders from China, Hong Kong and Singapore, said Xinja had forced its investors into a corner.
“Unfortunately the shareholders have two barrels of a gun at their head in relation to the two options,” Mr Allerton said.
“We want to help the company and shareholders restore value but we believe there needs to be a broader, more viable strategy than the one proposed.”
Xinja was granted an Australian Prudential Regulation Authority-regulated license to accept customer deposits in September 2019 and began offering customers a high interest savings account, despite not offering revenue generating products to balance its books.
The neobank has not yet finalised the return of its license – a process which normally takes a few days after APRA is satisfied the revocation is not contrary to the national interest or interest of depositors.
Mr Allerton added the group had made efforts to alert the federal government about their frustrations and called for the shareholder meeting to be postponed until their proposal had been considered.
Senator Andrew Bragg, who chairs the government’s financial technology committee, said he was aware of the shareholders’ concerns but had not received any formal letters from the Xinja Action Group.
“If there are aggrieved shareholders, they can write to me. I’ll look at their issues. But they need to go through the proper channels,” Mr Bragg said.
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