Hyderabad, Apr1 (UNI) AU Small Finance Bank (AU SFB), India’s largest small finance bank, on Tuesday announced it has completed a capital raise of ₹770 Cr via issuance of Tier-II bonds at a coupon of 9.20 per cent.
With this fund raise, the bank has achieved one of the largest bond issuances by any Small Finance Bank amidst adverse market conditions exacerbated by a tight liquidity environment with deal closing on the last working day of the Financial Year 2024-25, the bank said in a release.
The current capital raise is expected to increase the capital adequacy ratio of the Bank by 1 percent. Overall, the Bank remains well capitalised and had an overall capital adequacy ratio of 19.9 percent at the end of Q3’FY25, including interim profits for 9M’FY25.
HDFC Bank was the lead manager for the issue and was also the anchor investor for the deal along with Nippon India Mutual Fund.
The issuance saw strong participation from various Qualified Institutional Buyers (QIBs) including mutual funds, insurance companies, and pension funds.
The bank launched the issue at a base size of ₹400 crore with a green shoe option. It received an overwhelming response, resulting in subscription of approx. twice the base issue.
The bank accepted bids for ₹770 crore , making it one of the largest Tier-II issuances by a small finance bank. These bonds have a 10-year maturity, with a call option exercisable after 5 years from the date of issuance. This issue is rated ‘AA/Stable’ by ICRA & CARE.
Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank, said, " We thank investors for their continuing faith in us amidst a challenging liquidity environment, and specially, to our long-term partner HDFC Bank. They not only lead-managed this issue but also showed support by investing in the capital raise and we thank them for their long standing partnership. We remain very well capitalized, and the successful completion of this capital raise is a testament to the strength of our banking franchise and the confidence of our investors. The issue proceeds will boost our future growth trajectory and enable us to extend our digitally powered banking products and services across all parts of the country."
Earlier, the Board of Directors of AU SFB, at its meeting held recently approved the capital raise via issuance of Non-Convertible Debentures categorized as Tier II Capital.
AU SFB continuously evaluates its capital position as per its business growth plans and had last done capital raise in August 2022 for a total capital of ₹2,500 crore comprising Tier I capital of ₹2,000 crore and Tier II capital of ₹500 crore.
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