Federal Bank’s NBFC arm Fedback Financial Services, or FedFina as it is called, is reconsidering capital raising options following the lapse of its IPO approval, MD and CEO Shyam Srinivasan said.

“The company had filed a Draft Red Herring Prospectus (DRHP) last year and was exploring a capital raise but the markets were not that friendly at that point in time,” Srinivasan said at the bank’s Q1 earnings call.

“We have a resolution by the board that we will remain a majority investor as long as the regulations permit,” he said, adding that the bank currently holds 74 per cent stake in the NBFC.

FedFina had filed its draft prospectus in February 2022, which comprised fresh issue of shares up to ₹900 crore and an offer-for-sale of 457 lakh shares.

Recent reports had suggested that Federal Bank has paused considerations for stake sale in the arm for about ₹2,000 crore due to it being unable to reach a consensus with prospective investors over the valuation of FedFina, and because the bank wants to focus on its own fund raising plans.

FedFina was reportedly seeking a valuation of about ₹5,000 crore, and the capital raise was also expected to include dilution of PE firm True North’s stake. The NBFC has over 573 branches and offers gold loans, home loans, loans against property and business loans.

Asked on Federal Bank’s fund raising, Srinivasan said that the bank has shareholder approval to raise up to ₹4,000 crore via equity. While the bank plans to raise the same in FY24 to support the next phase of growth, it is still working on the plan and contours of the capital raise.

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