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AU Small Finance Bank (AU SFB) on Friday said it has completed a Rs 770 crore capital raise through the issuance of Tier-II bonds at a coupon of 9.20 per cent.
With this fund raise, AU SFB has achieved one of the largest bond issuances by any small finance bank, with the deal closing on the last working day of the financial year FY25, according to the bank.
The capital raise is expected to increase the lender’s capital adequacy ratio by around 1 per cent. Overall, the bank remains well capitalised and had an overall capital adequacy ratio of 19.9 per cent at the end of Q3FY25, including interim profits for 9MFY25.
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.
AU SFB had launched the issue at a base size of Rs 400 crore with a green shoe option. It received an overwhelming response, resulting in a subscription of nearly twice the base issue. These bonds have a 10-year maturity, with a call option exercisable after five years from the date of issuance. This issue is rated ‘AA/Stable’ by ICRA and CARE.
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