The Competition Commission of India (CCI) has approved the acquisition of certain warrants of Federal Bank by Asia II Topco XIII, paving the way for a minority investment in the private sector lender.

The proposed combination involves Asia II Topco XIII acquiring warrants issued by Federal Bank, with each warrant carrying the right to subscribe to one fully paid-up equity share of the bank. Upon full exercise of these warrants, the acquirer is expected to hold 9.99 per cent of Federal Bank’s paid-up share capital on a fully diluted basis.

As part of the transaction, the acquirer will also have the right to nominate a director to the board of Federal Bank, subject to it maintaining a minimum shareholding of at least 5 per cent of the bank’s paid-up equity capital. The arrangement is in line with regulatory norms governing minority investments and board representation in Indian banks.

Asia II Topco XIII is controlled by funds advised and/or managed by affiliates of Blackstone Inc., a global alternative asset manager with investments across private equity, real estate, credit and infrastructure. The proposed investment reflects continued interest by global financial investors in India’s banking and financial services sector.

Federal Bank is a private sector commercial bank in India offering a broad range of financial products and services. Its portfolio includes deposit accounts, loans, payment services and other retail and corporate banking solutions, catering to individuals, small businesses and large enterprises.

The CCI noted that the proposed acquisition does not raise any adverse competition concerns in the relevant markets and therefore granted its approval. A detailed order outlining the Commission’s assessment and rationale for clearing the transaction is expected to be issued separately.