International Finance Corporation, the World Bank’s private-sector investment arm, plans to provide a senior loan of $100 million to Federal Bank Ltd to fund its branch at the International Financial Services Centre in Gift City, Gujarat.
The funding support will help the bank’s clients in growing their business and supporting the GIFT City initiative in the process, IFC said in a disclosure. The GIFT City initiative is likely to create 500,000 jobs by 2020, it added.
Federal Bank commissioned its IFSC Banking Unit in November 2015. This will increase the bank’s ability to grow the business by extending term loans to customers who lack of long-term funding.
The new unit will also promote cross-border trade and investment across different regions, including Africa and Asia, and promote regional trade and investment, IFC said.
The private-sector bank was established in 1931 as Travancore Federal Bank. It was renamed as Federal Bank in 1954.
The bank has a dominant presence in Kerala and has a strong franchise among non-resident Indians. It has 1,252 branches and 1,665 ATMs across India.
IFC held a 2.24% equity stake in Federal Bank at the end of December 2016, according to stock-exchange data. Another foreign investor in the bank is Norwegian sovereign wealth fund Government Pension Fund Global. A number of local mutual funds and insurance companies also own a stake in the bank.
Apart from lending to companies in India, IFC has an active direct private equity-style investment practice. It also has an active LP, or limited partner, portfolio in India where it backs PE and venture capital funds focused on India.
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