The Reserve Bank of India (RBI) has approved private equity firm Blackstone’s proposal to buy up to 9.99% stake in Federal Bank.
This investment will be made through Blackstone’s affiliate Asia II Topco XIII Pte Ltd
Details of the Investment
Blackstone will invest about ₹6,196.51 crore in Federal Bank.
The bank will issue around 272.97 million warrants, each convertible into one equity share at ₹227 per share (including premium).
Once fully converted, Blackstone will hold 9.99% of Federal Bank’s equity and become its largest shareholder.
Additional Rights for Blackstone
If Blackstone holds at least 5% of the bank’s share capital, it can nominate a non-executive director to Federal Bank’s board.
Blackstone already received approval from the Competition Commission of India (CCI) in December 2025 for this acquisition.
Why This Matters
The RBI’s approval reflects growing foreign interest in India’s private banking sector.
Recent major foreign investments include Emirates NBD’s stake in RBL Bank and SMBC’s investment in Yes Bank.
The move underscores India’s attractive long-term growth prospects and the regulator’s supportive stance toward foreign capital in banking.
Context of the Deal
The preferential warrant issue to Blackstone was approved by Federal Bank’s board in October 2025 as a capital-raising strategy.
Blackstone will pay 25% upfront when subscribing to the warrants, and the remaining 75% at conversion into equity, typically within 18 months.
This strategic investment aims to provide additional capital, expertise, and credibility to the bank.
What are Convertible Warrants?
Convertible warrants are financial instruments that give an investor the right to buy company shares later at a fixed price, within a specific time period.
They are not shares immediately, but can be converted into shares in the future.
The conversion price is fixed in advance.
Investors usually pay a small upfront amount first and the remaining amount at the time of conversion.
If investors do not convert within the time limit, the warrants expire.
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