On June 16th, 2021, Wednesday, the private lender Federal Bank announced that it will raise about Rs 916 crore in equity capital by issuing shares to International Finance Corporation (IFC).
It revealed that the issuance has been approved by its board of directors to the World Bank arm International Finance Corporation along with associates for about Rs. 916.25 crore.

Additionally, the Kochi-based bank also revealed that it is also looking forward to getting a fundraise of up to Rs 4,000 crore in equity capital from its shareholders through different platforms like Right issues, private placements, qualified institutional placements, preferential issues or follow on public offer, GDR, ADR or foreign currency convertible bonds. For this, the bank is planning to draw a proposal at the Annual General Meeting scheduled on July 09, 2021.

Apart from this, the bank is also waiting for its shareholder’s approval for fundraising of up to Rs. 8000 crores through issuing debt securities in Indian or Foreign Currency including tier I, tier II, and long term bonds like infrastructure and ESG bonds, masala bonds, green bonds, NCDs.

These instruments are likely to be issued in the domestic or international market in one or more tranches on a private placement basis, according to the bank. The decision of approval regarding this fundraising will be in the hands of the board of directors subject to shareholder’s approval of the bank in its upcoming annual general meeting.

Equity shares up to 104,846,394 for Rs 87.39 each bundling to about Rs. 916.25 crore are proposed to be designated to IFC, IFC Financial Institutions Growth Fund, LP (FIG), and IFC Emerging Asia Fund, LP (EAF), according to Federal Bank in a regulatory filing.

Under this, the bank has decided on the issuance of 31,453,918 shares to IFC - 36,696,238 shares each to FIG and EAF. “There are three investors who are being issued equity shares under preferential allotment.” Said Federal Bank.

The federal bank considers Life Insurance Corporation of India (LIC) and investor Rakesh Jhunjhunwala among other shareholders. They respectively held a 3.92% and 2.40% stake in the bank at the end of March 2021.

IFC holds an active limited partner portfolio in India and initiates direct private equity-style investments and also lends to firms.

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