Blackstone to invest ₹6,200 crore for 9.99% stake in Federal Bank

Private-sector lender Federal Bank on Friday announced that New York-based Blackstone will invest ₹6,196.51 crore in the bank through its affiliate Asia II Topco XIII Pte Ltd via a preferential issue on a private placement basis.

- SUBRATA PANDA

The investment will make the private equity firm the largest shareholder in the Kochi-based bank.

The deal adds to a flurry of foreign investments in India’s banking sector. Industry experts attribute this trend to India’s strong long-term growth outlook and the Reserve Bank of India’s (RBI) and the government's increasingly accommodative stance on foreign investments in the sector.

Under the Blackstone arrangement, the bank will issue up to 272.97 million warrants, each convertible into one fully paid-up equity share of face value %2, at a price of 227 per share (including a premium of 225).

Following the conversion of the warrants, Blackstone — one of the world’s largest alternative asset management firms — will hold a 9.99 per cent stake in the bank, subject to regulatory and shareholder approvals.

The warrants will have a tenure of 18 months from the date of allotment and may be exercised in one or more tranches.