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Federal Bank on Friday announced that its Board has approved the sale of a 9.99 per cent stake to an affiliate of US-based private equity firm Blackstone.  

The deal, valued at Rs 6,196.5 crore, will be carried out through the issue of preferential equity shares and warrants, the bank said in a statement.

Under the agreement, 25 per cent of the warrant issue price will be paid at the time of subscription, while the remaining 75 per cent will be payable when the warrants are converted into equity shares.

Once the transaction is completed, Asia II Topco XIII Pte. Ltd., a Blackstone affiliate, will hold a 9.99 per cent stake in Federal Bank.

The bank plans to issue over 27 crore warrants, each priced at Rs 227. Each warrant can later be converted into one share of the bank, without any additional payment beyond the issue price unless otherwise specified.

As part of the deal, Federal Bank’s Board has also approved granting a special right to the Blackstone affiliate to nominate one retiring non-executive director to the Board once all the warrants are exercised.

Federal Bank will hold an Extraordinary General Meeting (EGM) on November 19 to seek shareholders’ approval for the proposed deal with Blackstone. The record date to determine eligible shareholders has been set for November 12.

Blackstone’s planned investment in Federal Bank is the latest in a series of major deals in India’s fast-growing financial sector, which has been drawing strong interest from global investors.

Earlier this month, Emirates NBD -- the UAE’s second-largest bank -- announced plans to acquire a majority stake in RBL Bank for $3 billion.

Meanwhile, IDFC FIRST Bank and Sammaan Capital have received investment commitments from Warburg Pincus and Abu Dhabi’s International Holding Company (IHC).

Following the announcement, shares of Federal Bank were trading slightly higher at Rs 229.30 apiece, up 0.86 per cent, as of 11:30 a.m. on Friday.