AU Small Finance Bank (AU SFB), India’s largest small finance bank, has successfully completed a capital raise of ₹770 crores through the issuance of Tier-II bonds at a coupon of 9.20%. This fund raise is expected to increase the capital adequacy ratio of the bank by nearly 1%. The bank’s overall capital adequacy ratio stood at 19.9% as of Q3’FY25, including interim profits for 9M’FY25.
The capital raise saw strong participation from Qualified Institutional Buyers (QIBs), including mutual funds, insurance companies, and pension funds. HDFC Bank was the lead manager for the issue and was also the anchor investor, along with Nippon India Mutual Fund. The issuance received an overwhelming response, with subscription of approximately twice the base issue.
The bonds issued have a 10-year maturity, with a call option exercisable after 5 years from the date of issuance. The issue is rated ‘AA/Stable’ by ICRA & CARE. AU SFB’s Founder, MD, and CEO, Sanjay Agarwal, expressed his gratitude to investors for their faith in the bank and its long-term partner HDFC Bank.
The successful completion of this capital raise is a testament to the strength of AU SFB’s banking franchise and the confidence of its investors. The issue proceeds will boost the bank’s future growth trajectory and enable it to extend its digitally powered banking products and services across the country. AU SFB has a history of evaluating its capital position as per its business growth plans and had last done a capital raise in August 2022 for a total capital of ₹2,500 crores.