Blackstone to Acquire 9.9% Stake in Federal Bank in $705 Million Deal

Global private equity giant Blackstone is set to invest approximately $705 million in India’s Federal Bank, acquiring a 9.9% stake and becoming the largest shareholder of the private lender. The investment, made through a Singapore-based affiliate, comes with the right to nominate a non-executive director to the bank’s board. The deal will be executed via preferential equity shares and warrants and requires approval from both shareholders and banking and competition regulators. Federal Bank’s extraordinary general meeting is scheduled for November 19 to approve the share issue and board nomination.

This move highlights the increasing momentum of dealmaking in India’s private banking sector. In recent weeks, Dubai-based Emirates NBD acquired a 60% stake in RBL Bank for $3 billion, while Japan’s Sumitomo Mitsui Banking Corporation bought a 20% stake in Yes Bank in May, followed by an additional 4.2% in September. Blackstone’s entry underscores growing investor interest in India’s mid-sized private banks amid a favorable economic and regulatory environment.

Shares of Federal Bank rose 1.15% to 229 rupees in Mumbai following the announcement. The bank, which has a loan book of 2.44 trillion rupees, reported a 9.6% decline in net profit to 9.55 billion rupees for the September quarter, affected by lower treasury income and higher provisions for bad loans. The investment by Blackstone is expected to strengthen the bank’s capital base and support its growth initiatives.

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