Federal Bank has secured the go-ahead from the Reserve Bank of India (RBI) to offload a stake of up to 45% in Fedbank Financial Services (Fedfina) to private equity firm True North.
“True North can further acquire additional equity shares of Fedbank Financial Services Ltd, constituting up to 45 per cent of the share capital in the company,” Federal Bank said in a regulatory filing.
Earlier this year, the private equity firm received the green light to acquire a 26% holding in Fedfina, which is a wholly-owned subsidiary of Federal Bank.
At that time, Federal Bank said that the investment will beef up Fedfina’s capital adequacy as well as diversify its funding sources. In addition, the investment is said to support Fedfina’s asset business and facilitate the growth of its branch network.
FedFina, which received the NBFC licence in 2010, provides loans to individual and corporate clients, against assets such as gold and real estate property. The business currently has presence in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, West Bengal, Rajasthan, Delhi, Gujarat and Maharashtra.