Federal Bank shortlists two investors for Fedfina stake divestment
Kolkata: Private sector lender Federal Bank has moved a step closer to divest 26% in its wholly-owned non-banking company FedBank Financial Services or Fedfina with narrowing down the number of prospective investors to two.
Federal Bank Managing Director Shyam Srinivasan said that these investors are locally domiciled funds and a deal with any of them is expected to get finalized in the next three months. These investors were selected from a shortlisted group of eight.
While the valuation exercise is still under way, according to Srinivasan, it is speculated that Fedfina would get a fresh capital of about Rs 300 crore through the deal.
“It needs capital to grow. We could have invested ourselves in the company but a strategic investor would bring in more expertise in the business,” the MD said.
Fedfina is in the business of home loans, loans against property, car loan and loans against pledge of gold ornaments, has an asset under management of Rs 1250 crore and net worth Rs 240 crore.
Federal Bank also has 26% stake in IDBI Federal Life Insurance, from which IDBI Bank is looking to get out to monetize the investment. Global investment bank JPMorgan has been appointed for valuation exercise.
Srinivasan said Federal Bank is open to every possibility —raising its stake in the insurance company, divesting it or exiting it fully.
He said the bank also looking to buy a strategic stake in a microfinance company and is talking to a few companies. If this happens, the Kerala-based bank would join the group of private lenders that have raised their stake with the so-called bottom of the pyramid customers through strategic investment or acquisition.
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Via:: Economic Times – Stocks