Federal Bank receives RBI approval for Blackstone’s 9.99% stake buy

Federal Bank

Reserve Bank of India (RBI) has given its approval to Blackstone for acquiring an aggregate stake of up to 9.99% in Federal Bank, the private lender said on Thursday.   Private equity firm Blackstone is acquiring stake through its arm Asia II Topco XIII Pte Ltd.

Blackstone’s proposed investment in Federal Bank is set to mark one of the biggest private equity entries into India’s private banking space, underscoring growing global investor confidence in the country’s financial services sector.

The deal, which would make Blackstone the largest shareholder in Federal Bank, involves an investment of around $700 million for a 9.9% stake. The private equity major had reached an agreement for the investment in October.

The investment will be routed through a Singapore-based affiliate of Blackstone. As part of the agreement, the global firm will have the right to nominate a non-executive director to Federal Bank’s board, the lender has said.

The transaction adds to a series of high-profile deals in India’s private banking sector over the past year. In October, Dubai-based Emirates NBD agreed to acquire a 60% stake in RBL Bank. Earlier, Japan’s Sumitomo Mitsui Banking Corporation bought a 20% stake in Yes Bank in May, followed by an additional 4.2% stake in September.

With global investors increasingly backing Indian lenders, the momentum in private banking dealmaking reflects confidence in the sector’s growth prospects, balance sheet strength, and long-term role in India’s expanding economy.

Earlier, fair trade regulator CCI in December cleared US-based Blackstone's proposal to acquire 9.99 per cent stake through warrants in private sector lender Federal Bank.

"The proposed combination envisages acquisition of certain warrants by Asia II Topco XIII Pte Ltd (acquirer), each carrying a right to subscribe to one fully paid-up equity share of Federal Bank Ltd (target)," the regulator said in a release.

Upon full exercise of the warrants, the acquirer will hold a 9.99 per cent of the paid-up share capital of Federal Bank, on a fully diluted basis. Blackstone will have the right to nominate a director on the target's board, as long as it holds at least 5 per cent stake in the bank, according to the release.

Federal Bank Ltd is a private sector commercial bank in the country and offers a wide range of products and services, such as deposits, loans, payment services, etc.

Federal Bank on October said its board has approved fundraising by issuance of preferential warrant worth over Rs 6,196 crore to Blackstone group entity Asia II Topco XIII Pte Ltd.

In a regulatory filing, it said the board has approved the grant of a special right to the investor to nominate one non-executive director on the board upon exercise of all the warrants and subject to the investor holding at least 5 per cent of the paid-up share capital of the bank.

Federal Bank will issue over 27.29 crore preferential warrants at a price of Rs 227, aggregating to Rs 6,196 crore via private placement. The tenure of the warrants is 18 months from the date of their allotment.

Post exercise of warrants into equity shares, Asia II Topco XIII Pte. Ltd. will hold 9.99 per cent stake in Federal Bank, the filing said.

"The bank has executed an investment agreement dated October 24, 2025, with the Investor (Asia II Topco XIII Pte Ltd," it added.