Blackstone to pick up to 9/99% stake in Federal Bank for Rs 6196 crore

Core Insights - Federal Bank's board approved a proposal for a private placement of up to 27.29 crore warrants to a private equity investor, Blackstone, for a 9.99% stake valued at Rs 6,196.51 crore [4] - The investment will strengthen Federal Bank's capital base and support growth in retail, SME, and digital businesses [4] - The bank is focusing on capital adequacy and preparing for expansion through various fundraising channels, including rights issues and preferential allotments [3][4] Investment Details - Each warrant can be converted into one equity share at an issue price of Rs 227, with a face value of Rs 2, including a premium of Rs 225 [4] - The investor will pay 25% of the issue price upfront, with the remaining balance due at the time of conversion, which must occur within 18 months [4] - If the investor holds at least 5% equity post-conversion, they will have the right to appoint one non-executive director to the board, subject to shareholder approval [4] Regulatory and Shareholder Approval - The proposal requires approvals from shareholders and regulators, including the Reserve Bank of India (RBI) and the Competition Commission [4] - An extraordinary general meeting for shareholder approval is scheduled for November 19, 2025, with eligible shareholders able to vote electronically [3][4] Industry Context - Indian banks are actively raising private capital in 2025, with significant transactions reported, including RBL Bank's Rs 26,853 crore commitment from Emirates NBD and Yes Bank's stake acquisition by Japan's Sumitomo Mitsui Banking Corporation for about Rs 15,000 crore [3][4]