Federal Bank to raise ₹6,196 crore through warrant issue to Blackstone entity

Federal Bank has taken a significant step to raise capital, announcing that its board of directors has approved a preferential issue of warrants worth ₹6,196.5 crore to Asia II Topco XIII Pte. Ltd., an affiliate of global investment firm Blackstone. The announcement had an immediate positive impact on the bank’s shares, which gained over 2%, reaching ₹232.25 apiece on the BSE.

Under the approved proposal, Federal Bank will issue 27,29,74,043 warrants to the Blackstone entity through a private placement. Each warrant will give the holder the right to subscribe to one fully paid-up equity share at a price of ₹227, which includes a premium of ₹225 over the face value of ₹2 per share. Once fully converted, this transaction will result in Blackstone holding around 9.99% of Federal Bank’s paid-up equity capital.

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Board Nomination and Payment Terms

As part of the arrangement, Blackstone will have the right to nominate one non-executive director to Federal Bank’s board, provided its shareholding reaches at least 5% following the conversion of warrants. This move is seen as a strategic step to strengthen the bank’s governance with input from a major institutional investor.

The payment for the warrants will be structured in two stages. Asia II Topco XIII Pte. Ltd. will pay 25% of the issue price upfront at the time of subscription, while the remaining 75% will be settled upon conversion of the warrants into equity shares. The warrants will have a validity of 18 months from the date of allotment and can be exercised either fully or in multiple tranches during this period.

The investment agreement between Federal Bank and Blackstone’s affiliate was formally signed on October 24, 2025. In line with regulatory requirements, the bank has also scheduled an extraordinary general meeting (EGM) of shareholders on November 19, 2025 to secure approvals for both the preferential issue and the grant of the board nomination right. The record date for e-voting has been set as November 12, 2025.

This deal reflects Federal Bank’s strategy to raise substantial capital while bringing in a reputed institutional investor, which is likely to strengthen its balance sheet and provide further growth opportunities in the competitive banking sector.