World Bank investment arm International Finance Corporation (IFC) and two associate entities will invest Rs 916 crore ($124 million at currency exchange rates) in Kerala-based Federal Bank through a preferential allotment.
The board of the private sector bank on Wednesday approved the issuance of up to 10.5 crore equity shares of face value of Rs 2 each to IFC, IFC Financial Institutions Growth Fund, LP (FIG) and IFC Emerging Asia Fund, LP (EAF) at Rs 87.39 per share, Federal Bank said in a regulatory filing.
IFC will pick up 3.1 crore share to acquire a 1.5% stake while IFC FIG and IFC EAF will acquire 3.6 crore shares each to own a 1.75% stake each in the bank.
Federal Bank counts Life Insurance Corporation of India (LIC) and investor Rakesh Jhunjhunwala among other shareholders. LIC and Jhunjhunwala held 3.92% and 2.40% stake in the bank respectively at the end of March 2021.
The bank’s board also decided to raise up to Rs 4,000 crore by issuing equity shares or other instruments through various modes over one or more tranches. The modes could include rights issue, private placement, qualified institutions placement, preferential issue or follow-on public offer, GDR, ADR or foreign currency convertible bonds.
The bank further got approval to raise Rs 8,000 crore funds via the issuance of debt securities including additional tier 1 bonds, tier 2 bonds, long term bonds, masala bonds, green bonds and NCDs in Indian or foreign currency.
On Wednesday, IFC also proposed to invest Rs 156.05 crore ($21.3 million) in dairy company Dodla Dairy Ltd ahead of its proposed initial public offering (IPO).
IFC has an active LP (limited partner) portfolio in India and makes direct private equity-style investments as well as lends to companies. Last month, the World Bank unit proposed a loan of up to $50 million (Rs 354 crore) for Rabobank to help the Dutch cooperative bank fund agriculture and renewable energy projects in India. In May, it committed an equity investment of up to $15 million in a India-focused clean energy fund managed by GEF Capital Partners.
Prior to that, it invested up to $40 million in the third fund of Baring Private Equity Asia’s India-focused credit platform.