Jun 18: AU Small Finance Bank (BSE: 540611, NSE: AUBANK) has received approval from its shareholders to raise Rs 1000 cr from Temasek, a global investment company at Singapore.
This is the largest primary capital infusion in AU Bank and its first ever since their last raise in fiscal 2012. Its INR 1913 crore IPO last year was a complete Offer-for-Sale with no infusion in the bank. AU Bank, because of its long-standing track record of more than 22 years and its differentiated business model, has always been on the radar of investors.
Its other shareholders include marquee institutions like IFC, Warburg Pincus, Chrys Capital and Kedaara Capital. Temasek’s fresh investment comes on the heels of yet another year of strong results. Despite a tepid macro environment and AU’s transitioning on to the bank platform, both occurring in the first half of last fiscal, AU Bank clocked a strong disbursements growth of more than 60%, AUM growth of ~50% and mobilized ~INR 8000 crores of deposits, in FY18. Despite yields coming under pressure and a sharp rise in its operating expenses as a result of transitioning, AU Bank managed to deliver an ROA of ~1.7% and ROE of 13.7%, in the first fiscal, post becoming a bank. Balancing capital requirements for growth and rewarding its investors, AU Bank’s board had proposed a dividend of INR 0.50 per share in its first year of listing.
As of 31st March 2018, AU Bank had expanded its branch network to over 500 touch points including 306 bank branches, 97 asset centers, 89 BC outlets, 23 offices and 292 ATMs. On its growth strategy and fund usages, Mr. Sanjay Agarwal, MD & CEO of AU Bank said, “Onboarding Temasek, a highly esteemed investor with a long-term horizon, is a testimony of the strengths of our business model, our execution track record and the market opportunity. This capital raise will strengthen our presence in both the digital and the physical marketplace. We remain focused on bringing efficiencies in our delivery model and creating new products and services to address the diverse needs of our customers. This fund raise will allow us to remain sufficiently capitalized in the near term, as we continue striving towards achieving a ~35-40% p.a. growth target. We welcome Temasek to AU Bank.”