Blackstone Acquires 9.99% Stake in Federal Bank for ₹6,196.5 Crore
Global private equity giant Blackstone has agreed to invest ₹6,196.5 crore in Federal Bank, acquiring a 9.99% stake through a preferential warrant issue. This marks one of the largest private equity investments in India’s private banking sector.
Key Deal Details
- Investment Size: ₹6,196.5 crore
- Stake: 9.99% in Federal Bank
- Investment Vehicle: Asia II Topco XIII (Blackstone entity)
- Instrument: Preferential warrants convertible to equity shares
- Price per Share: ₹227 (including ₹225 premium)
Warrant Structure and Terms
The deal involves up to 27.3 crore warrants, each convertible to one equity share of face value ₹2. The warrants have an 18-month tenure from allotment date and can be exercised in multiple tranches.
Blackstone will pay 25% of the issue price upfront during subscription, with the remaining 75% payable upon conversion to equity shares. Any unexercised warrants after 18 months will lapse, with the initial payment forfeited.
Board Representation Rights
Federal Bank’s board has approved granting Blackstone the right to nominate one non-executive director once all warrants are converted and the investor maintains at least 5% equity stake. This nomination right requires shareholder approval under Sebi regulations.
Approval Process and Market Reaction
The bank has scheduled an extraordinary general meeting on November 19 to seek approvals for the preferential issue and board nomination rights. The record date for e-voting is November 12.
Following the announcement, Federal Bank shares rose 1.3% to ₹230.75 on the NSE. This comes after the bank reported a 10% drop in net income for the September quarter last week.
