Private equity firm True North is acquiring a 17.4% stake in the financial services unit of Federal Bank for Rs 1.68 billion ($23.5 million). The PE firm is buying the stake in Fedbank Financial Services (Fedfina) via fresh shares. True North had agreed to acquire a 26% stake in Fedfina in May. In October, the Reserve Bank of India had allowed Federal Bank to sell up to 45% of Fedfina to True North. The investment will help Fedfina boost its capital base, primarily to support its growing asset business and expand its branch network. The infusion will also strengthen its capital adequacy and diversify its funding sources. Fedfina offers property loans, structured finance, gold loans and other products. It also distributes loans of Federal Bank. True North will be acquiring shares in Fedfina through its sixth fund. The firm has a focus on mid-sized profitable businesses and had previously raised $2 billion across 5 funds to invest in various sectors, especially in the categories of financial services, consumer, healthcare and technology products and services.
