Federal Bank recently approved the sale of a 9.99% stake to an affiliate of US private equity firm Blackstone for ₹6,196.5 crore. The transaction will be executed via preferential equity shares and warrants, with 25% of the warrant price payable at subscription and the remaining 75% at the time of equity allotment. Post-deal, Asia II Topco XIII Pte. Ltd. will hold 9.99% of the bank.
Private equity firms are also playing a significant role. For example, International Holding Company (IHC) investment in Sammaan Capital and Warburg Pincus’s stake in IDFC First Bank are long-term bets aimed at tapping growth opportunities in the banking and NBFC sectors.
Over the past year, investors like Blackstone, Emirates NBD, and SMBC have committed billions of dollars to mid-sized banks and NBFCs, highlighting the sector’s improving fundamentals.
These investors bring not just funds but also experience in governance, risk management, and digital capabilities.
Pratik Shah, Partner at EY India, highlighted the impact of these inflows: “This capital, especially patient one, is a trend in the right direction,” helping banks expand credit, modernise technology, and diversify products to capture emerging opportunities in MSME lending and wealth management.
Regulatory oversight has also strengthened investor confidence. NBFCs now face governance and compliance standards similar to banks, which makes them safer and more attractive for large-scale foreign investments.
Khara stated that past crises like DHFL and IL&FS have taught the sector important lessons in transparency and long-term sustainability.
For the entire discussion, watch the accompanying video