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Kerala-based private sector lender Federal Bank Ltd. has approved the issue of convertible warrants on a preferential basis to Asia II Topco XIII, an affiliate of private equity firm Blackstone.
Federal Bank has approved the issue of 27.29 crore warrants, each carrying a right to subscribe to one fully paid-up equity shares of the bank at a price of ₹227 per share, which is nearly the same price at which the stock closed on Thursday.
At ₹227 per share, the amount that Blackstone will be infusing into Federal Bank would be ₹6,196 crore.
Subject to approval of shareholders of the bank, Blackstone will receive a special right to nominate one non-executive director of the board upon exercise of all the warrants, and subject to holding at least 5% of the total paid-up share capital.
Moneycontrol had reported earlier that this will be done through a preference issue of shares of up to 9.99% of the total equity and a few major private equity players have been approached.
At the end of the September quarter, Federal Bank had a Capital to Risk-weighted Assets Ratio (CRAR) of 15.71%, tier-1 capital ratio of 14.37%, compared to regulatory requirements of 9% and 6% respectively. Its Credit-Deposit ratio is also at 84.7%.
Federal Bank's board meet also assumes significance as there have been a slew of deals with mid-sized banks this year, where marquee investors have pumped in big funds.
As recently as last week, Emirates-NBD announced that it will be investing close to ₹27,000 crore in RBL Bank to acquire up to 60% stake, including the mandatory open offer.
In May, Japan's Sumitomo Mitsui Banking Corporation (SMBC) acquired a stake of over 20% in private lender Yes Bank, while a Warburg Pincus affiliate acquired a 9.48% stake in IDFC First Bank.
Shares of Federal Bank ended little changed on Thursday at ₹227. The stock made a 52-week high of ₹231.25 on Thursday as well. Shares have gained 18% in the last one month, thereby turning positive on a year-to-date basis.
Federal Bank has approved the issue of 27.29 crore warrants, each carrying a right to subscribe to one fully paid-up equity shares of the bank at a price of ₹227 per share, which is nearly the same price at which the stock closed on Thursday.
At ₹227 per share, the amount that Blackstone will be infusing into Federal Bank would be ₹6,196 crore.
Subject to approval of shareholders of the bank, Blackstone will receive a special right to nominate one non-executive director of the board upon exercise of all the warrants, and subject to holding at least 5% of the total paid-up share capital.
Moneycontrol had reported earlier that this will be done through a preference issue of shares of up to 9.99% of the total equity and a few major private equity players have been approached.
At the end of the September quarter, Federal Bank had a Capital to Risk-weighted Assets Ratio (CRAR) of 15.71%, tier-1 capital ratio of 14.37%, compared to regulatory requirements of 9% and 6% respectively. Its Credit-Deposit ratio is also at 84.7%.
Federal Bank's board meet also assumes significance as there have been a slew of deals with mid-sized banks this year, where marquee investors have pumped in big funds.
As recently as last week, Emirates-NBD announced that it will be investing close to ₹27,000 crore in RBL Bank to acquire up to 60% stake, including the mandatory open offer.
In May, Japan's Sumitomo Mitsui Banking Corporation (SMBC) acquired a stake of over 20% in private lender Yes Bank, while a Warburg Pincus affiliate acquired a 9.48% stake in IDFC First Bank.
Shares of Federal Bank ended little changed on Thursday at ₹227. The stock made a 52-week high of ₹231.25 on Thursday as well. Shares have gained 18% in the last one month, thereby turning positive on a year-to-date basis.
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