Blackstone’s 9.99% stake acquisition in Federal Bank deal gets RBI green light: Report

The Reserve Bank of India (RBI) has approved global private equity major Blackstone’s acquisition of up to a 9.99 per cent stake in Federal Bank, according to a Reuters report, marking a significant foreign investment in India’s private banking sector.

The approval follows the Competition Commission of India (CCI) clearing Blackstone’s proposal in December 2025 to acquire a 9.99 per cent stake in the Kochi-based private sector lender through warrants. Earlier, in October 2025, Federal Bank had announced that New York-based Blackstone would invest ₹6,196.51 crore via its affiliate, Asia II Topco XIII Pte Ltd, through a preferential issue on a private placement basis.

Under the arrangement, Federal Bank will issue up to 272.97 million warrants, each convertible into one fully paid-up equity share of face value ₹2, at an issue price of ₹227 per share, including a premium of ₹225. The warrants will have a tenure of 18 months from the date of allotment and may be exercised in one or more tranches.

Upon full conversion of the warrants, Blackstone will hold a 9.99 per cent stake in Federal Bank, subject to regulatory and shareholder approvals. Post the transaction, Blackstone will have the right to nominate a director to the bank’s board as long as its shareholding remains at or above 5 per cent. The investment will make Blackstone the single largest shareholder in Federal Bank.

The deal adds to a growing wave of foreign investments in India’s banking sector, driven by the country’s strong long-term growth prospects and an increasingly accommodative stance by the RBI and the government towards overseas capital in financial services.

Dealmaking activity in India’s private banking space has picked up pace over the past year. Dubai-based Emirates NBD agreed to acquire a 60 per cent stake in RBL Bank in October, while Japan’s Sumitomo Mitsui Banking Corporation bought a 20 per cent stake in Yes Bank in May, followed by an additional 4.2 per cent stake in September.

Federal Bank has also posted steady financial performance. On January 16, the lender reported a 9 per cent year-on-year rise in net profit to ₹1,041 crore for the third quarter of FY26, compared with ₹955 crore in the corresponding period last year, supported by healthy loan growth and stable margins.

Asset quality continued to improve, with gross non-performing assets (NPAs) declining to 1.72 per cent as of the December quarter from 1.95 per cent in Q3 FY25. Net NPAs improved to 0.42 per cent from 0.49 per cent a year earlier, which the bank described as its best level in a decade.

Net interest income (NII) rose 9 per cent year on year to ₹2,653 crore from ₹2,431 crore, while net interest margin (NIM) improved to 3.18 per cent in Q3 FY26 from 3.11 per cent in the year-ago quarter.

With a market capitalisation of ₹70,385.18 crore, shares of Federal Bank were trading at ₹285.90 apiece, down nearly 0.50 per cent from the previous close of ₹287.35.