Federal Bank has announced a significant capital-raising decision, with global private equity firm Blackstone committing an investment of ₹6,196.51 crore that could give it close to a 10% stake in the bank. The board has approved issuing 272.97 million convertible warrants at ₹227 per share, forming part of a broader fundraising plan to strengthen the bank’s balance sheet and support future growth.
Blackstone will pay 25% of the warrant value upfront, with the remainder due at the time of conversion. The warrants can be exercised within 18 months in one or more tranches. Any unconverted warrants after this period will lapse, and the upfront payment will be forfeited.
As part of the agreement, Federal Bank will also offer Blackstone the right to nominate one non-executive director to the board, provided the investor holds at least 5% of the bank’s post-conversion equity.
The bank is also exploring additional capital-raising avenues, including a rights issue, preferential allotment and a qualified institutional placement, to enhance its financial flexibility.
An Extraordinary General Meeting is scheduled for 19 November to seek shareholder approval for the proposals. Shares of Federal Bank rose modestly in early trade following the announcement, reflecting positive investor sentiment around the infusion.
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