Federal Bank approves issue of warrants worth ₹6,200 crore to Blackstone at ₹227 per share

Shares of Federal Bank Ltd. are in focus on Friday, October 24, as the lender's board meets to consider and approve, if deemed fit, a proposal to raise funds.

The fund raising could either be done through a rights issue, preferential allotment, or through a Qualified Institutional Placement (QIP).

Moneycontrol had reported earlier that this will be done through a preference issue of shares of up to 9.99% of the total equity and a few major private equity players have been approached.

However, Blackstone’s official spokesperson replied stating, “As business strategy, Blackstone does not look at minority transactions. We are not in this deal.”

At the end of the September quarter, Federal Bank had a Capital to Risk-weighted Assets Ratio (CRAR) of 15.71%, tier-1 capital ratio of 14.37%, compared to regulatory requirements of 9% and 6% respectively. Its Credit-Deposit ratio is also at 84.7%.

Federal Bank's board meet also assumes significance as there have been a slew of deals with mid-sized banks this year, where marquee investors have pumped in big funds.

As recently as last week, Emirates-NBD announced that it will be investing close to ₹27,000 crore in RBL Bank to acquire up to 60% stake, including the mandatory open offer.

In May, Japan's Sumitomo Mitsui Banking Corporation (SMBC) acquired a stake of over 20% in private lender Yes Bank, while a Warburg Pincus affiliate acquired a 9.48% stake in IDFC First Bank.

Shares of Federal Bank ended little changed on Thursday at ₹227. The stock made a 52-week high of ₹231.25 on Thursday as well. Shares have gained 18% in the last one month, thereby turning positive on a year-to-date basis.