Shares of Federal Bank started strong but slipped on Wednesday after the firm’s unit won approval from SEBI for its IPO.

What Happened: Fedbank Financial Services, a subsidiary of Federal Bank, on Tuesday received approval from SEBI for an IPO to raise funds worth ₹1,700 crores. The IPO structure includes a fresh issue of ₹900 crore and an offer for sale of up to 4.57 crore shares by existing shareholders and promoters.

In the proposed offer for sale, Federal Bank plans to offer up to 1.65 crore shares, while True North Fund VI LLP aims to sell up to 2.9 crore shares. As of now, Federal Bank holds a majority stake of 73.31% in Fedbank Financial Services, with True North Fund VI LLP owning a 25.76% stake.

See Also: Why This Railway Stock Is Climbing 3% Today

Why It Matters: FedFina will likely use the funds for business expansion and strategic initiatives. The lead managers for the issue include ICICI Securities Limited, Equirus Capital Private Limited, IIFL Securities Limited and JM Financial.

FedBank Financial Services Ltd is a retail-focused non-banking financial company, promoted by Federal Bank. It operates on a "twin engine" business model, with two complementary products, namely gold loans and instalment loans to small and mid-sized companies and emerging self-employed individuals.

Price Action:  Federal Bank’s share price was up nearly 1% at the start of trade, but gave up its gains to trade flat at ₹152.90 near the start of trade Wednesday.

Read Next: Why Dabur India Shares Are In Focus Today