MUMBAI: The largest and the oldest private sector bank in Kerala, The Federal Bank, has said global private equity major Blackstone has agreed to pick up 9.99% stake in the lender for Rs 6,196.5 crore. The investment will come through subscribing to a preferential issue of warrants worth Rs 6,196.5 crore to Asia II Topco XIII, a group entity of the global private equity giant.
The warrants will be issued on a private placement basis, subject to shareholders’ and regulatory approvals, the bank said in an exchange filing Friday. The announcement comes within a week of smaller peer RBL Bank announcing the biggest ever foreign equity participation in domestic banking by issuing 60 percent stake worth of preferential shares to the UAE-based Emirates NBD for Rs 26,853 crore or $3billion.
The deal also involves the Arab bank taking another 26 percent through an open offer. The Kochi-based bank said each warrant will carry the right to subscribe to one fully paid-up equity share of face value Rs 2 at a price of Rs 227 a share, including a premium of Rs 225.
The proposed issue comprises up to 27.3 crore warrants, which, on full conversion, will result in Asia II Topco XIII holding about 9.99 percent of the bank’s paid-up equity share capital. The warrants will have a tenor of 18 months from the date of allotment and may be exercised in one or more tranches. The investor will pay 25 percent of the issue price at the time of subscription, with the balance 75 percent payable on conversion into equity shares. Any unexercised warrants at the end of the tenure will lapse, and the amount paid on them will be forfeited.
Federal Bank said its board has also approved granting a special right to the investor to nominate one non-executive director on its board, once all warrants are exercised and the investor continues to hold at least 5 percent of equity. The nomination right will be subject to shareholder approval under listing obligations and disclosure requirements regulations of the market regulator Sebi.
The bank has called an extraordinary general meeting on November 19 to seek approvals for the preferential issue and the grant of the board nomination right. The record date for e-voting has been fixed as November 12.Federal Bank stock rose after the announcement, and was trading up 1.3 percent at Rs 230.75 on NSE. The bank had last week reported a 10 percent drop in net income in the September quarter.