NBFC arm FedFina reconsidering capital raise options: Federal Bank

Federal BankNBFC’s Fedback financial services arm, or FedFina as it is called, is reconsidering options for raising capital after the expiration of a period Subscription Agree, said managing director and CEO Shyam Srinivasan.

“The company filed a draft prospectus for Red Herring (DRHP) last year and was exploring capital raising but the markets were not friendly at that time,” Srinivasan said on the bank’s first-quarter earnings call.

“We have a decision from the board of directors that we will remain a majority investor as long as the regulations allow,” he said, adding that the bank currently holds a 74 percent stake in the company. NBFC.

FedFina filed its draft prospectus in February 2022, which included a new issue of shares amounting to ₹900 crore and an offer for sale of 457 thousand shares.

Recent reports have suggested that the Fed has paused considerations of selling shares in the arm for Rs 2,000 crore due to its inability to reach consensus with potential investors on FedFina’s valuation, and because the bank wants to focus on its own fund raising plans.

FedFina was reportedly seeking a valuation of around ₹5,000 crore, and the capital increase was also expected to include a dilution of True North’s stake in PE. NBB has over 573 branches and offers gold loans, home loans, loans against mortgages and business loans.

Asked about the Fed’s fundraising, Srinivasan said the bank has shareholder approval to raise up to Rs 4,000 crore via equity. While the bank plans to raise the same amount in FY24 to support the next phase of growth, it is still working on the capital increase plan and lines.