New Delhi, May 13 -- True North, one of India's oldest private equity firms, has made its second liquidity move of this year as it completed its exit from a financial services company that it first backed nearly eight years ago.

The PE firm, which is led by managing partner Vishal Nevatia and elevated two executives as co-managing partners earlier this year, sold its entire remaining stake in Fedbank Financial Services Ltd this week via a block deal.

It offloaded a 6.86% stake in the non-bank lender, a unit of Federal Bank, for Rs 385 crore ($40.2 million), stock-exchange data show. This comes after it sold a chunk of its stake in another non-bank lender, Home First Finance Company, earlier this year.

True North had invested around Rs 375 crore in Fedfina through its sixth fund in multiple tranches starting 2018 and ending 2021.

The PE firm sold a sizable portion of its stake during the lender's initial public offering to garner Rs 415.60 crore in November 2023 and separately divested more shares just before the IPO to mop up Rs 291.65 crore.

It sold small chunks of Fedfina's shares between October 2025 and March 2026, before offloading the remaining stake this week. While the exact timing and price of these open-market share sales couldn't be ascertained, the PE firm is likely to have garnered around Rs 90-105 crore through these transactions.

Overall, True North mopped up Rs 1,190-1,200 crore by selling its stake. That translates into a 3.2x multiple on invested capital and an internal rate of return (IRR), or annualised return, of around 25% in rupee terms, VCCircle estimates show.

However, based on the first-in, first-out (FIFO) methodology, its IRR from the latest stake sale would be around 20% because of the longer holding period and because Fedfina's shares have remained flat since listing.

Fedfina had issued shares at Rs 140 apiece in its IPO. The shares touched a low of Rs 85.20 in May last year but bounced back thereafter to nearly double to touch Rs 178 apiece in January this year. Since then, the shares have fallen back to Rs 150 levels.

To be sure, True North's returns still match the minimum 20% IRR that PE firms typically chase in local currency terms at the fund level.

True North has backed several companies in the banking, financial services, and insurance segment including Infinity Fincorp Solutions and Niva Bupa Health Insurance. Last year, it agreed to sell its stake in Infinity to Swiss PE firm Partners Group and made a partial exit from Niva Bupa through open market transactions. In addition, it sold its stake in Shree Digvijay Cement and Biocon Biologics, and made a partial exit from Anthem Biosciences last year.

Fedbank Financial provides gold loans, loans against property, and home loans. The company operates over 750 branches across 17 states and union territories.

The lender's net profit rose nearly 53% year-on-year to nearly Rs 344 crore in the financial year ended March 2026, aided by growth in the loan book. Its assets under management rose nearly 28% to Rs 20,153 crore as on March 31. The company disbursed Rs 31,410 crore in loans during FY26.

Federal bank held a near 61% stake in the non-bank lender as on March 31. Among public shareholders, Nuvama Crossover Opportunities Fund held a 1.1% stake in the company.

Published by HT Digital Content Services with permission from VC Circle.