AU Small Finance Bank (AU SFB) has successfully raised ₹770 crore through the issuance of Tier-II bonds at a 9.20% coupon rate, led by HDFC Bank and Nippon India Mutual Fund. This is one of the largest Tier-II bond issuances by a small finance bank in India. The transaction, executed on the final working day of FY 2024-25, signals strong investor appetite in India’s small finance bank sector, particularly amid a tight liquidity cycle.
The issuance received robust interest from qualified institutional buyers (QIBs), with anchor investors HDFC Bank and Nippon India Mutual Fund supporting the transaction. The bond issue was oversubscribed nearly 2X, with AU SFB ultimately accepting ₹770 crore in bids. This funding will enhance the bank’s capital adequacy ratio, building on its already strong capital position.
The successful issuance reflects investor trust in AU SFB’s banking franchise and the strength of its capital planning. The bank’s leadership believes that this transaction will power its expansion plans and support its digitally led banking services across India. AU SFB’s CEO, Sanjay Agarwal, expressed gratitude to investors for their continued faith in the bank and acknowledged HDFC Bank’s support.
This capital infusion marks a significant milestone in AU SFB’s strategic capital planning, following its last capital raise in August 2022. The bank has now mobilized over ₹1,200 crore in Tier-II capital in less than three years, enabling it to continue expanding its footprint in underserved and semi-urban markets. With this capital, AU SFB is well-positioned to further its vision of inclusive, technology-driven financial services in India.