PE firm True North to take 265 stake in Fedbank Financial

Homegrown private equity firm True North is acquiring a 26-per cent stake in private sector lender Federal Bank’s wholly-owned subsidiary FedBank Financial Services Ltd (FedFina). The financial details of the deal, which will done through purchase of fresh shares, have not been disclosed.

“We consider this investment by True North an endorsement of the business outlook and capabilities of FedFina. This transaction and the expertise that True North carries with them will turn out to be seminal in the growth and expansion of FedFina,” Shyam Srinivasan, MD & CEO, Federal Bank of said.
The deal is subject to statutory and regulatory approvals. The investment will help FedFina augment its capital base primarily to support its growing asset business and to grow its branch network. It will help further improve the company’s financial fundamentals by strengthening its capital adequacy and diversifying its funding sources, the company said in a statement.
“FedFina has successfully built out its assets under management of more than $200 million and intends to continue driving its next phase of growth by increasing its product offering and exploring cross selling to its current and potential customers. The company’s track-record and explosive growth is a testament to the FedFina’s leadership team. Our investment in FedFina is a reiteration of our renewed sector focused investment strategy,” Divya Sehgal, Partner, True North said,
ICICI Securities was the financial advisor to the transaction.
Federal Banks total business mix (deposits and advances) stood at Rs 1.85-lakh crore as at 31 December 2017 and it has earned a net profit of Rs733.86 crore for the three quarters ended 31 December 2017.