Federal Bank on Thursday said it agreed to acquire a strategic minority stake of 26% in investment banking firm Equirus Capital Pvt. Ltd, which will enable the private sector bank to offer a host of products including wealth management services to high networth individuals (HNIs) and the non-resident Indians (NRIs) diaspora.
The transaction is subject to statutory and regulatory approvals and satisfactory completion of financial and legal due diligence.
Federal Bank has a network of 1,252 branches and 1,679 ATMs spread across the country, while the Mumbai-headquartered Equirus Capital has done more than 135 transactions across mergers and acquisitions (M&A), private equity (PE), initial public offerings (IPOs), qualified institutional placements or QIPs and structure finance deals, raising more than $3.2 billion in the process. It also serves corporate clients and HNI customers and offers services covering equity capital market, debt capital market, structured finance, advisory services and wealth management.
With this alliance, Federal Bank is looking to increase its product offerings to a spectrum of wholesale clients by offering comprehensive financial solutions across debt, equity, mezzanine, structured funding and capital market products and advisory. The strategic tie-up would help shore up non interest earnings for the bank while creating additional revenue streams with identified clients.
“With a shift in client preferences, our foray into investment banking will help us participate in opportunities and instruments beyond traditional banking products,” said Ganesh Sankaran, executive director, Federal Bank, in a statement. Ashvin Parekh Advisory Services were the sole advisors to Federal Bank.
Federal Bank’s shares closed at Rs 90.40, down 1.74%, on the NSE on Thursday.
Over the last few months, banks in India have been actively taking several strategic steps. Last month, IDFC Bank and Capital First, a non-banking finance company (NBFC), announced a merger to form a combined entity that would have a distribution network of nearly 194 branches and assets under management (AUM) of Rs 88,000 crore. A few days ago, investment firm Fairfax India Holdings Corp said it has agreed to invest nearly $186 million for 51% equity in The Catholic Syrian Bank Ltd.