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

Federal Bank on Friday announced that New York-based Blackstone will pick up a 9.99 per cent stake by investing ₹6,196.51 crore through its affiliate Asia II Topco XIII, ending days of speculation around it and swelling the list of foreign players picking up shares in mid-sized Indian banks.

Under the investment, to be made through preferential issue on a private placement basis, the Kochi-based private lender 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 warrants, the US private equity firm will own a 9.99 per cent stake in the bank, subject to the approval of regulators, and shareholders.

The warrants will have a tenor of 18 months from the date of allotment and may be exercised in one or more tranches. The investor will pay 25 per cent of the issue price at the time of subscription, with the balance 75 per cent payable upon conversion into equity shares. Any unexercised warrants at the end of the tenure will lapse, and the amount paid on them will be forfeited.

The bank’s board has also approved a special right to Blackstone to nominate one retiring non-executive director on the board of the bank, upon exercise of all the warrants and subject to them holding at least 5 per cent of the paid-up share capital of the bank.

Shares of the bank are up 1.12 per cent at ₹229.90 on the BSE, following the announcement.

Federal Bank does not have a promoter, and all its shares all publicly held.

The bank has called an extraordinary general meeting (EGM) of shareholders on November 19, 2025, via video conferencing to seek approvals for the preferential issue and the grant of the board nomination right. The record date for e-voting has been fixed as November 12, 2025.

The Indian banking sector has seen a flurry of foreign investors investing in the sector. Last week, Emirates NBD announced that it will invest $3 billion for a 60 per cent stake in RBL Bank, the largest foreign investment in India’s private banking space.

Earlier this year, Japan’s SMBC bought a 24 per cent stake in Yes Bank.

Additionally, Abu Dhabi’s largest listed company, International Holding Co. PJSC acquired a 42 per cent stake in Sammaan Capital for almost $1 billion.

Earlier, Warburg Pincus and Abu Dhabi Investment Authority (ADIA) invested $877 million in IDFC FIRST Bank.