Federal Bank recently announced its strategic capital-raising initiative through a preferential issue of warrants aimed at raising ₹6,200 crore. The bank plans to issue approximately 27.3 crore warrants, each convertible into one equity share at a face value of ₹2, with a subscription price of ₹227 per share. These warrants must be exercised within 18 months of their allotment, with 25 percent of the price payable upfront at subscription, projected for Q4 of FY26.
Upon full conversion, Blackstone would acquire a 9.99 percent stake in the bank’s paid-up equity, with no anticipated change in control. Additionally, Blackstone will have the right to nominate one non-executive, non-independent director, contingent upon the exercise of all warrants and maintaining a shareholding of at least 5 percent. This appointment is subject to approvals from the Reserve Bank of India (RBI), the Nomination and Remuneration Committee (NRC), the bank’s Board, and shareholders.
According to management, the premium pricing of this issue reflects confidence in their growth strategy backed by a prominent long-term institutional investor.
Analysts have responded positively, assigning a higher multiple to Federal Bank, factoring in its enhanced growth outlook, the recent capital raise at a valuation of 1.2 times one-year forward Adjusted Book Value (ABV), and its strategic partnership with Blackstone. This recalibration has led to an upward revision in the loan growth forecast to approximately 15 percent from a previous estimate of 13.5 percent. Consequently, the target price has also been increased to ₹253 per share, up from ₹210.
The publication date of this announcement was October 30, 2025.
