AU Small Finance Bank (AU Bank) on Wednesday announced the completion of a total capital raise of ₹2,500 crore comprising Tier-I capital of ₹2,000 crore and Tier-II capital of ₹500 crore.
This capital raise takes the bank’s overall capital adequacy ratio (CRAR) from 19.4 per cent to 25.7 per cent (as on 30th June 2022 on pro-forma basis), the bank said in a statement.
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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, it added.
The Qualified Institutions Placement (QIP) Issue of ₹2,000 crore (about $253 million) was launched on August 3 at a price band of ₹570-590 per share.
The bank said the issue was oversubscribed 4 times with bids crossing $1.01 billion, with investors such as sovereign wealth funds, large foreign portfolio investors, global asset managers, domestic insurance companies and mutual funds showing interest.
The Capital Raising Committee (CRC) of the bank fixed the issue price at ₹580 per share and approved allotment of about 3.44 crore equity shares of face value ₹10 each to 67 allotted bidders, per the bank’s statement.
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 August 2 at a base size of ₹400 crore with a greenshoe option of ₹200 crore. The bank eventually issued bonds for ₹500 crore.
The bank did not disclose the coupon rate or tenor of the NCD issue.
Sanjay Agarwal, MD & CEO, said, “With a post-issue CRAR of over 25 per cent (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.”