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Federal Bank to invest in financial services unit via rights issue
Photo Credit: VCCircle

Private sector lender Federal Bank on Tuesday said it would invest Rs 148 crore ($20.2 million) in its financial services unit through a rights issue. 

Fedbank Financial Services Ltd (Fedfina) will get the money, Federal Bank said in a stock exchange filing. 

Federal Bank, which currently holds a 74% stake in Fedfina, will acquire shares at a price of Rs 70 apiece. 

This is not the first time Fedfina is raising money via a rights issue. In March 2020, it got Rs 52 crore from homegrown mid-market private equity firm True North through this route.

Fedfina has expanded its range of offerings ever since it started operations as a gold loan financier in August 2010. It now offers loans against property and loans to small and medium enterprises and non-banking finance companies (NBFCs) including microlenders. 

Having been incorporated in 1995, Fedfina is a non-deposit-taking NBFC. As of March 2021, it had an asset size of Rs 5,466 crore. 

On Monday, its parent Federal Bank reported a 58.6% year-on-year increase in net profit to Rs 477.8 crore for the quarter ended March. Net interest income was Rs 1,420.4 crore, up 16.8%.

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