Blackstone has announced plans to acquire a 9.9 percent stake in The Federal Bank Limited through a preferential issue of warrants worth ₹6,196 crore, marking one of the largest private equity investments in India’s banking sector in recent years. The deal was approved by the board of Federal Bank at its meeting held on October 24, 2025. Under the proposal, the bank will issue up to 27.29 crore warrants priced at ₹227 each, with each warrant convertible into one fully paid equity share having a face value of ₹2. The investor in this transaction, Asia II Topco XIII Pte. Ltd., an affiliate of Blackstone, will acquire these warrants through a private placement route, subject to approvals from shareholders, the Reserve Bank of India, and the Competition Commission of India.
The total consideration for the issue stands at approximately ₹6,196.5 crore. As per the terms of the agreement, 25 percent of the warrant price will be paid at the time of subscription, and the remaining 75 percent will be payable upon conversion into equity shares. The warrants will have a tenure of 18 months, within which the investor can exercise its right to convert them into shares in one or more tranches. If the investor fails to exercise this option within the given period, the unconverted warrants will lapse, and the amount paid upfront will be forfeited. Once the warrants are fully converted, Blackstone will hold close to 9.99 percent of the bank’s paid-up share capital.
Federal Bank has also agreed to grant certain special rights to the investor after the conversion of all warrants. Upon holding at least 5 percent of the bank’s paid-up capital and completing the conversion process, Blackstone will have the right to nominate one non-executive director to the board of the bank. This right will be subject to shareholder approval under Regulation 31B of SEBI’s Listing Obligations and Disclosure Requirements and will need to be renewed every five years.
The bank has scheduled an Extraordinary General Meeting on November 19, 2025, at 11 a.m. through video conferencing to seek shareholder approval for the preferential issue and related matters. The record date for determining the shareholders entitled to vote at the meeting has been fixed as November 12, 2025.
This strategic investment is expected to strengthen Federal Bank’s capital position and support its future growth initiatives. The ₹6,196 crore infusion will enhance the bank’s balance sheet and provide greater flexibility for expansion across key business segments. For Blackstone, the move represents a significant bet on India’s growing financial services sector and reaffirms its long-term commitment to the country’s banking industry.