Federal Bank halts $244m deal

Federal Bank, a Mumbai-listed bank, has decided to delay a stake sale in its non-banking financial unit, Fedbank Financial Services Ltd., as it has been unable to reach a consensus with potential investors regarding the valuation, according to sources familiar with the matter. The bank has also put the deal on hold to focus on raising funds of up to Rs 4,000 crore ($488 million) from investors, one of the sources mentioned.

Earlier reports in March indicated that FedFina was seeking a valuation of around Rs 5,000 crore ($611 million) in the stake sale. The deal was expected to involve the sale of existing FedFina shares from Federal Bank as well as private equity firm True North. However, discussions regarding the valuation are ongoing, and the bank could revive the stake sale in FedFina at any time, according to the sources.

True North’s shares have experienced a decline of approximately 12% this year, resulting in a market value of around $3.1 billion.

FedFina, which acquired a non-banking financial company license in 2010, operates over 573 branches across the country, offering various products including home loans, business loans, and loans secured by gold and other assets. In February 2022, FedFina filed a draft IPO prospectus to raise Rs 900 crore ($110 million) and is expected to pursue a listing in the coming year, as stated by Federal Bank CEO Shyam Srinivasan in an interview with Bloomberg News in May.