· Largest capital raise in the Bank’s history was oversubscribed multiple times – Equity by 4x and Tier-II capital by 2x
· The fresh capital will be used to support the Bank’s growth plans over the medium term and takes the Bank’s capital adequacy ratio (CRAR) to over 25%
AU Small Finance Bank Ltd. (AU Bank), India’s largest small finance bank by assets, announced the successful completion of a total capital raise of ₹2,500 Cr comprising of Tier I capital of ₹2,000 Cr and Tier II capital of ₹500 Cr. This takes the Bank’s overall capital adequacy ratio (CRAR) from 19.4% to 25.7% (as on 30th Jun 2022 on pro-forma basis). The fresh capital will be used to support the Bank’s growth plans over the medium term and will help maintain sufficient headroom over and above the regulatory capital adequacy requirements.
The QIP Issue of ₹2,000 Cr (~USD 253mn) was launched on 3rd August 2022 at a price band of ₹570 – ₹590 per share and witnessed strong demand from both Foreign Institutional Investors (FII) & Domestic Institutional Investors (DII), and the QIP issue was oversubscribed 4x with bids crossing USD 1.01Bn and strong interest from marquee investors like sovereign wealth funds, large foreign portfolio investors, global asset managers, domestic insurance companies and mutual funds. The Capital Raising Committee (CRC) of the Bank fixed the issue price at ₹580 per share and approved allotment of 3,44,82,758 (Three Crores Forty-Four Lakh Eighty-Two Thousand Seven Hundred and Fifty Eight) Equity Shares of face value ₹10 each to 67 (sixty seven) allotted bidders.
Post converting into a Small Finance Bank in April 2017, this is the third and the largest primary equity capital raise by the Bank after raising ₹1,000 Cr from Temasek in 2018 and 2019 via preferential issuance and ₹625.5 Cr through Bank’s first QIP in March 2021.
AU Bank also raised Tier II capital via private placement of unsecured, subordinated, rated, listed, redeemable, non-convertible lower Tier II bonds in the form of Non-Convertible Debentures (NCD). The issue opened on 2nd August 2022 at a base size of ₹400 Cr with a Greenshoe option of ₹200 Cr and the issue witnessed strong reception from Qualified Institutional Buyers (QIBs) like mutual funds, insurance companies, banks, etc., resulting in 2x oversubscription with final bids of ₹1,110 Cr The bank eventually issued bonds for ₹500 Cr retaining a Greenshoe option of ₹100 Cr. The issue was rated ‘AA/Stable’ by CRISIL & CARE Ratings.
Speaking on the occasion, Mr. Sanjay Agarwal, MD & CEO, AU Small Finance Bank, said: “I am overwhelmed and humbled by the response of investors to the successful completion of ₹2,500 Cr of capital raise with a mix of ₹2,000 Cr Tier I capital and ₹500 Cr of Tier II capital issuance amid the volatile market conditions. I am deeply grateful to all our existing shareholders for their participation in this issue and also welcome all the incoming newer investors – both FIIs and domestic investors, for their confidence in us and in supporting our growth plans. Our objective remains to build a best-in-class tech-led retail bank in India with a very sustainable business model and the fresh capital will significantly help us in that journey. With a post-issue CRAR of over 25% (pro-forma basis) coupled with sustained demand from the segments we cater to, and stable asset quality, we are well positioned to grow and take advantage of the tremendous opportunity that market provides us with. I remain a strong believer that this decade will be India’s and hope that the success of our QIP and Tier II issue and the overwhelming demand from FIIs will augur well for the overall sector”.