Blackstone to Acquire 9.9% Stake in India’s Federal Bank

Private equity giant Blackstone is set to become the largest shareholder in Federal Bank with an investment of around $705 million for a 9.9% stake. The move marks another major transaction in India’s accelerating private banking space.

The deal will be executed via a Singapore-based Blackstone affiliate through preferential equity shares and warrants. It also allows Blackstone the right to nominate a non-executive director to Federal Bank’s board, reflecting its growing influence in the country’s banking sector.

Shareholders of Federal Bank are scheduled to approve the preferential share issue and board seat at an extraordinary general meeting on November 19. Following the announcement, Federal Bank’s shares in Mumbai rose 1.15% to 229 rupees.

This investment comes amid a flurry of marquee deals in Indian banking this year. Dubai-based Emirates NBD recently acquired a 60% stake in RBL Bank for $3 billion. Japan’s Sumitomo Mitsui Banking Corporation has also been active, buying 20% of Yes Bank in May and an additional 4.2% in September.

Federal Bank, with a loan book of 2.44 trillion rupees, saw a 9.6% decline in net profit to 9.55 billion rupees for the September quarter. The drop was attributed to lower treasury income and higher provisions for bad loans.

The Blackstone investment is expected to provide the bank with a strong capital boost, positioning it for strategic growth and potential expansion in India’s competitive private banking market.