Private equity firm True North has secured approval to acquire a 17.4 percent stake in the financial services unit of Federal Bank $23.5 million, the bank said in a BSE filing on Thursday.
Bengaluru, 16th Nov,2018. RedNewswire/-
True North is buying the stake in Fedbank Financial Services Ltd (Fedfina) via fresh shares, the private-sector bank said in a stock-exchange disclosure on Thursday. Fedfina’s board approved the share allotment on Tuesday.
The investment will help FedFina augment its capital base primarily to support its growing asset business and to grow its branch network, it said in a statement earlier. It will help further improve the company’s financial fundamentals by strengthening its capital adequacy and diversifying its funding sources.
FedFina received a non-banking financial company licence in 2010, and offers property loans, structured finance, gold loans and other products. It also distributes loans of Federal Bank. The loan book of the company had grown by 48 per cent to Rs1,422 crores in FY18 from Rs962 crore in FY17.
“The board of Fedbank Financial Services (Fedfina), subsidiary company of the bank, had in its meeting dated November 13, 2018 approved allotment of 40,042,500 equity shares, with face value of Rs 10 each, corresponding to 17.40 per cent of the share capital of Fedfina, to True North Fund VI LLP on preferential basis for a total consideration of Rs 168.60 crore,” Federal Bank said in a regulatory filing.
The PE firm had agreed to acquire a 26% stake in Fedfina in May. Last month, Federal Bank had received approval from the Reserve Bank to sell up to 45 per cent stake in non-banking financial company (NBFC) arm Fedfina to private equity firm True North.