A surprise U-turn by private equity giant Advent International prompted O.P. Bhatt to resign as chairman of on Tuesday, as a ‘no’ vote by its largest shareholder denied the veteran banker the minimum 75% vote required for an extension.
Advent’s vote came just three weeks after a panel including its nominee signed off on an extension, against the backdrop of differences on the company board on Bhatt continuing at the helm of India’s fastest-growing IT services company.
The flip-flop by a private equity giant in India’s $315 billion IT outsourcing industry marks a rare case of a minority investor using its voting power to block a chairman’s reappointment. The news of the resignation, disclosed by the company on Wednesday, in the Noida-based company’s share price.
“I believe that continuing on the board while there remains a disagreement considering the characteristics of my good faith actions in the board evaluation process would not be conducive to the effective functioning of the board,” Bhatt said in his resignation email dated 8 September.
Coforge’s board has appointed Vivek Sharma, a non-executive independent director, as interim chairman until 1 January 2027. Incidentally, Sharma is a senior advisor to Advent.
The immediate trigger for the resignation is the Coforge internal auditor’s findings, which the company disclosed in the same filing.
“As part of the internal audit plan for Q2FY26, the company’s internal auditor reviewed, among other matters, the process followed in relation to the Board Evaluation Exercise under the guidance of the chairman and the resulting Board Evaluation Report (BER) presented by the chairman to the board,” the filing said.
The report is essentially an internal assessment of the performance of the board and its directors.
This is the second time this year that Coforge has seen shareholder opposition to a resolution. In January, its public shareholders had rejected the firm’s decision to give Advent the right to nominate members on the board’s audit, nomination, and remuneration panels, forcing the company to remove these privileges.
Unlike the last time, when public investors opposed a resolution, this time it was the insider who rejected the resolution at Coforge, which ended last year with $1.87 billion in revenue, with a 29.2% growth, the fastest among the two dozen listed information technology firms.
Mint could not independently ascertain the reason behind this Advent’s change of stance. Emails sent to Advent and Coforge went unanswered.
According to the company’s disclosures to the stock exchanges, Advent owns 21.18% of Coforge, or about 93.8 million shares. This makes it the firm’s largest shareholder.
Bhatt, who served as chairman of until 2011 and had earlier served as a board member of Tata Consultancy Services Ltd, Tata Motors Passenger Vehicles Ltd and Tata Steel Ltd, took over as Coforge chairman on 29 June 2024. His term as an independent director ends on 30 April 2027.
Under rules for listed entities, Coforge sought shareholder nod for non-executive director and chairman Bhatt for another five-year term starting 1 May and ending 30 April 2032, as he turned 75 on 7 March 2026.
Public investors, including mutual funds, insurance firms and foreign money managers, own 68.2% of Coforge, while Advent and a few other corporate bodies own the remaining 31.8%. Domestic mutual funds own 30%. Coforge does not have a promoter.
On 23 August, around 88% of its public investors had voted in the resolution seeking Bhatt’s reappointment. Nearly 90% of these large money managers, including Norway’s Norges Bank Investment Management, Nordea Asset Management and most domestic mutual funds, had approved his candidature, as per filings reviewed by Mint.
According to the voting disclosure and an executive privy to the matter, Advent was the only large non-institutional segment that voted against Bhatt’s candidature. This led to the resolution being approved by only 65% of shareholders, falling short of the required 75% for a special resolution.
Notably, Advent and other public investors backed four other resolutions, including the reappointment of chief executive officer Sudhir Singh.
Significantly, the opposition from Advent, which became the largest shareholder only in April, came less than a month after the company’s nomination and remuneration committee, which includes Advent’s representative, reappointed Bhatt for another five-year term on 27 July, according to the company’s annual report.
Advent’s managing partner Shweta Jalan and another executive, Atin Jain, had joined the Coforge board on 23 April, after Coforge closed the Encora acquisition. End December, Coforge made the largest acquisition by an Indian IT services firm, when it decided to spend $2.39 billion to buy Encora, a US data analytics and digital engineering firm. Under the deal, Coforge gave shares to Encora’s majority owner, Advent, which eventually took a 21% stake in the Noida-based IT services firm.
Jalan joined the board-appointed the nomination and remuneration committee, while Jain became a member of the audit committee. Messages and calls to Jalan and Bhatt seeking a comment on the issue did not elicit a response.
The review issue
The board evaluation review identified “certain concerns in relation to the manner in which the BER had been dealt with and presented to the board, including that certain material information contained in or relating to the report and the performance of the chairman had not been fully disclosed to the board when the BER was presented,” read Coforge’s filing to the stock exchanges.
Mint could not independently ascertain the concerns or the material information the company says it failed to disclose.
A proxy advisory executive said disagreements might have come to the fore. “This is a rare instance and underlines a point of disagreement between O.P. Bhatt and the largest shareholder, Advent, that was brought to the fore,” said Shriram Subramanian, founder of InGovern Research Services, a Bengaluru-based proxy advisory firm.
“The company seems to have couched it as a matter of board evaluation, rather than disagreements in strategies or policies between the chairman and Advent,” he said.