Federal Bank gets nod to sell 26% stake in subsidiary to True North

The board of private sector bank Federal Bank has approved 26 per cent strategic investment by home-grown private equity player True North in its wholly-owned subsidiary FedFina subject to statutory and regulatory approvals.

The investment will help FedBank Financial Services augment its capital base, primarily to support its growing asset business and to grow its branch network, the Keralabased bank said. It will help further improve the company's financial fundamentals by strengthening its capital adequacy and diversifying its funding sources, the bank said.

Federal Bank MD and Chief Executive Shyam Srinivasan said the bank was happy to welcome True North onboard. “We consider this investment by True North an endorsement of the business outlook and capabilities of FedFina. This transaction and the expertise that True North carries with it will turn out to be seminal in the growth and expansion of FedFina,” he said.

True North partner, Divya Sehgal said, "We are excited to work together with Federal Bank and the entire management team during this exciting and transformative time for FedFina which has continued to register impressive growth." It (FedFina) has successfully built out its AUM (assets under management) of more than $200 million and intends to continue driving its next phase of growth by increasing its product offering and exploring cross selling to its current and potential customers, she said.