Global private equity giant Blackstone is set to acquire a 9.99% stake in Federal Bank through a preferential allotment of warrants, marking its first-ever minority investment in an Indian company. The deal, valued at Rs 6,196 crore, will see Blackstone, through its Singapore affiliate Asia II Topco XIII Pte, subscribing to 273 million warrants at Rs 227 per share.
The stock of the Kerala-based bank, within minutes of the market opening, hit a new all-time high of Rs 232.25 per share on the BSE. However, following profit booking, it ended flat at Rs 227.40 per share, up 5 paise or 0.02% from its previous close of Rs 227.35. In October, the stock of Federal Bank has gained 20%, compared to a 4.8% rise in the BSE Sensex.
With the conversion window set at 18 months, each warrant carries the right to convert into one equity share of Federal Bank. The dilution will be staggered, allowing Blackstone to exercise its conversion rights in tranches. The firm will pay 25% of the total consideration upfront, with the remaining 75% payable upon conversion.
The transaction was approved by Federal Bank’s board on October 24, 2025, and is subject to shareholder and regulatory approvals, including from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI). An extraordinary general meeting (EGM) has been scheduled for November 19 to seek shareholder consent.
“Overnight, we become the bankers for all Blackstone-invested entities in India,” said a senior Federal Bank official. “We wanted marquee investors like Blackstone, who would be patient and stay locked in the company. They liked our strategy and were willing to stay invested despite being minority shareholders,” he added, explaining the strategic rationale.
As part of the agreement, Blackstone will be entitled to nominate one non-executive director to the board, contingent on full conversion of the warrants and maintaining at least a 5% stake in the bank.
“The increasing foreign investment and consolidation in the Indian banking sector signify the resilience and robustness of the Indian economy and financial system,” said Ashok Chandra, MD & CEO, PNB, in a recent interview with FE. “With the government allowing up to 74% FDI, he expects more foreign investors to show interest in the Indian market.”
This year, dealmaking has gathered pace in the Indian banking and financial space. Last week, Dubai-based bank Emirates NBD acquired a majority stake in RBL Bank for Rs 26,850 crore. Similarly, Japanese Sumitomo Mitsui Banking Corporation (SMBC) bought a 24.22% stake in Yes Bank, while private equity player Warburg Pincus and sovereign fund Abu Dhabi Investment Authority (ADIA) invested close to Rs 7,500 crore to acquire nearly a 15% stake in IDFC First Bank. Abu Dhabi-based International Holding Co (IHC) also acquired a controlling stake in Sammaan Capital, formerly Indiabulls Housing Finance.
“There is a lot of interest in the Indian financial sector from regions like Japan, the Middle East, and Singapore,” said Rajeev Ahuja, Executive Director, RBL Bank, on the sidelines of a media conference, commenting on which regions are showing interest in the Indian banking sector.