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IFC, along with two investment funds managed by IFC Asset Management Company (IFC Financial Institutions Growth Fund and IFC Emerging Asia Fund) have picked up 4.99 per cent stake in Federal Bank for ₹916 crore.
“Increased financing for climate friendly projects as well as more financing for small businesses to help accelerate India’s economic recovery from Covid-19 are expected in the wake of a $126 million (₹916 crore) equity investment in Federal Bank,” the private sector lender said in a statement on Thursday.
The investment will also support Federal Bank’s commitment to environmental social and governance (ESG) standards, and also strengthen its Tier 1 capital adequacy ratio (CAR) and expand its micro, small and medium sized enterprises (MSME) and climate finance portfolios, it further said.
“After the bank’s board approved issuance of shares to the IFC group to an extent of 4.99 percent of the bank's paid-up capital, IFC has become a significant shareholder of the bank,” said Shyam Srinivasan, Managing Director and CEO, Federal Bank.
The investment also marks IFC’s first in India aligned to the Greening Equity Approach, which will enable the Federal Bank to reduce its exposure to coal and increase its climate lending.
Roshika Singh, Acting Country Manager for IFC in India said the move is in line with IFC’s strategy to support green growth and will also help create jobs.
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