Blackstone-Backed Asia II Topco XIII Seeks CCI Nod for Up to 9.99% Stake in Federal Bank

Aluva, November 21: Blackstone-backed, Asia II Topco XIII is formally seeking approval from the Competition Commission of India (CCI) for a proposed investment to buy up to 9.99% stake in Federal Bank Limited. It announced that it will execute the investment in Federal Bank through the acquisition of convertible warrants.

Federal Bank Limited (NSE: FEDERALBNK, BSE: 500469) is a major Indian private sector commercial bank known for its strong presence in Kerala and its extensive national and global network. The bank offers a wide range of financial products and services under its core philosophy of ‘Digital at the Fore, Human at the Core’. The bank was established in 1931, and is headquartered in Aluva, Kerala.

Strategic Investment to Participate in the Financial Services Segment

Asia II Topco XIII said that it is viewing the investment in Federal Bank as an opportunity to participate in the financial services segment of India, which is increasing at a quick pace. It said that it wants to participate by investing in a well-established bank such as Federal Bank, which has a strong presence in India.

Under the investment proposal, Asia II Topco XIII will subscribe to a series of warrants. Each warrant will be convertible into one fully paid-up equity share of Federal Bank. It is required that the warrants must be exercised within 18 months, or earlier if required under the investment terms. If approved, the stake of Asia II Topco XIII may go up to 9.99% in Federal Bank. It will also have the right to nominate one director to the Federal Bank’s board, as long as it holds a 5% stake in the bank.

Shares Rise 0.28% to ₹245.62

As of 2:45 PM, Federal Bank share price was up by 0.28%, or 0.69 points and was trading at ₹245.62. Until now, the shares have traded within a range of ₹247.60 and ₹244. The traded volume for the Federal Bank stock stood at 59.70 lakh shares, with the company’s market cap at ₹60,257 crore. The shares have their 52-week high at ₹248.50 and their 52-week low at ₹172.66.

Investor Takeaway for Federal Bank

It is always a good sign for any company when an external entity wants to invest a huge sum of money to buy a stake. It indicates that the entity is confident of the company’s long term potential. Asia II Topco XIII seeking CCI’s approval for buying up to 9.99% stake in Federal Bank is a positive sign for the company and its shareholders. It will help in enhancing the capital adequacy, and will support the company’s balance sheet growth. The announcement has led to a slight share price rise.

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