AU Small Finance Bank has successfully raised Rs 770 crore by issuing tier-II bonds at a coupon of 9.20% per annum. The bond issue was subscribed by a range of investors, including HDFC Bank, Nippon India Mutual Fund, and other insurance companies and pension funds. The net proceeds from the issue are expected to increase the bank’s capital adequacy ratio by approximately 1%, from 19.9% at the end of December last year.
According to Sanjay Agarwal, Managing Director of AU Bank, the issue proceeds will accelerate the bank’s growth trajectory and enable it to extend its digitally powered banking products and services across the country. At the end of the third quarter, the bank’s total loan portfolio stood at Rs 1.09 lakh crore, while its deposit base was Rs 1.12 lakh crore.
The successful bond issue is a significant milestone for AU Small Finance Bank, which has been expanding rapidly in recent years. The bank’s small size and limited capital base had previously restricted its growth. However, with this capital raise, the bank is now poised for further expansion, leveraging its already strong deposit base and lending platform.
AU Bank’s tier-II bond issue is also a testament to the bank’s ability to attract a diverse range of investors, including prominent financial institutions and insurance companies. This demonstrates the bank’s credibility and attractiveness to institutional investors, which is likely to have a positive impact on its reputation and growth prospects.
Overall, the successful bond issue is a significant step forward for AU Small Finance Bank, providing the necessary capital to support its future growth and expansion plans.