Federal Bank selects True North as strategic investor for Fedfina

Non-banking finance company, Fedfina which is a 100 per cent subsidiary of Federal Bank is in advance stage of talks to sell 26 per cent of the NBFC to True North Capital.

The expected value of the deal is approximate Rs. 400 crore for 26 per cent stake, said news reports on Monday. Federal Bank aims to employ the capital raised from this transaction to expand the company's businesses geographically. Federal Bank also seeks to benefit from True North's expertise. 

Fedfina started as a gold loan company and grew as a distribution arm of Federal Bank, in August 2010 it was recognized as a NBFC. The company's offering includes home loans, auto loans and gold loans. Fedfina has a strong presence in southern parts of India including Andhra Pradesh, Karnataka and Tamil Nadu. 

According to annual report for FY2017, Fedfina's loan book of grew by 57 per cent from Rs. 611 crore in FY16 to Rs. 962 crore in FY17. While total revenue grew by 50 per cent from Rs. 89.48 crore in FY16 to Rs. 134.62 crore in FY17. Also, NII grew by 31 per cent from Rs. 54.31 crore in FY16 to Rs. 71.24 crore in FY17.

Meanwhile, at 10:34 hours, the stock of parent bank, Federal Bank was at Rs. 97.40 per share, up by 0.62 per cent on Monday.