Federal Bank to Raise ₹6,196 Crore via Preferential Issue to Blackstone

The Federal Bank Ltd has announced a major fund-raising plan through a preferential issue of warrants worth ₹6,196.5 crore to Asia II Topco XIII Pte. Ltd., an entity belonging to the Blackstone Group, one of the world’s leading private equity firms.

The decision was approved by the bank’s board on Friday and disclosed in an exchange filing. The warrants will be issued on a private placement basis, subject to necessary shareholder and regulatory approvals.

Blackstone to Acquire Up to 9.99% Stake

According to the filing, each warrant will entitle the holder to subscribe to one fully paid-up equity share of face value ₹2 at an issue price of ₹227 per share, which includes a premium of ₹225.

The proposed issue includes up to 27.3 crore warrants, and upon full conversion, Asia II Topco XIII Pte. Ltd. will hold approximately 9.99% of the bank’s paid-up equity capital.

This marks one of the most significant private equity investments in the Indian banking sector in recent times, reflecting strong investor confidence in Federal Bank’s performance and growth outlook.

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Investment Agreement Signed on October 24

The investment agreement between Federal Bank and the Blackstone entity was signed on October 24, 2025, the bank confirmed.

The tenure of the warrants will be 18 months from the date of allotment, and investors will have the flexibility to exercise them in one or more tranches.

Under the terms of the agreement:

• 25% of the issue price will be paid at the time of subscription.
• The remaining 75% will be payable upon conversion of warrants into equity shares.
• Any unexercised warrants after the tenure period will lapse, and the amount paid on them will be forfeited.

This structure ensures that the investment is phased and performance-based, aligning long-term interests between Federal Bank and Blackstone.

Board Grants Special Rights to Investor

In addition to the capital infusion, the Federal Bank board has also approved granting a special right to the investor to nominate one non-executive director to its board.

This right will be available once all warrants are exercised and the investor continues to hold at least 5% of the bank’s paid-up capital.

The nomination will be subject to shareholder approval under Regulation 31B of SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations.

This move underscores the strategic nature of Blackstone’s investment and its intent to play an active governance role once the stake is acquired.

A Boost to Federal Bank’s Capital and Growth

The preferential issue is expected to strengthen Federal Bank’s capital base and provide additional resources to support its business growth and expansion plans.

Earlier this week, Federal Bank had reported a 10.85% quarter-on-quarter rise in net profit, backed by record-high net interest income (NII) and strong asset quality. The new investment from Blackstone adds further momentum to the bank’s positive financial trajectory.

Federal Bank’s tie-up with a global player like Blackstone is a strong endorsement of its financial health and long-term potential.

Conclusion

With this ₹6,196 crore preferential issue, Federal Bank is poised to secure one of the largest private equity investments in Indian banking, thereby reinforcing its growth plans and financial stability.

The partnership with Blackstone’s Asia II Topco XIII Pte. Ltd. not only enhances the bank’s capital strength but also opens avenues for strategic collaboration and governance participation in the coming years.

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