Federal Bank Ltd has announced board approval for a significant fund-raising initiative through a preferential issue of warrants to Asia II Topco XIII Pte. Ltd., a global private equity investor, potentially raising up to ₹6,197 crore. The move marks one of the largest single-investor capital infusions in the bank’s history and underscores growing institutional confidence in India’s mid-sized banking sector.
Deal Structure and Key Details
Under the proposal, Federal Bank will issue up to 27.29 crore convertible warrants at a price of ₹227 per warrant, each convertible into one equity share within 18 months from the date of allotment. The warrants carry a face value of ₹2 and a premium of ₹225, aligning with SEBI pricing guidelines.
On full conversion, Asia II Topco XIII would acquire a 9.99% equity stake in Federal Bank. The investor will initially pay 25% of the issue price at the time of subscription, with the balance 75% payable upon conversion.
This strategic investment is expected to bolster the bank’s capital adequacy ratio, providing additional headroom for expansion across retail, SME, and digital banking verticals.
Investor Rights and Governance
As part of the agreement, Asia II Topco XIII will gain the right to nominate one non-executive director to the bank’s board, subject to key conditions — including full warrant conversion and maintaining a minimum 5% ownership stake.
Approval and Next Steps
The proposal will require approvals from the Reserve Bank of India (RBI), the Competition Commission of India (CCI), and the bank’s shareholders. An Extraordinary General Meeting (EGM) has been scheduled for November 19, 2025, with November 12 set as the record date for voting eligibility.
Strategic Outlook
The preferential issue represents Federal Bank’s proactive approach to capital strengthening amid rising credit demand and growth opportunities in the Indian banking landscape. The investment also reflects private equity’s increasing interest in India’s financial services sector, particularly in well-governed, mid-sized banks with strong retail franchises.
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