AU Small Finance Bank raises 770Crore capital via Tier-II bond issuance in a challenging environment

• Anchor investors for the deal were HDFC Bank and Nippon India Mutual Fund
• One of the largest Tier-II issuances by a small finance bank

Mumbai, March 29, 2025: AU Small Finance Bank (AU SFB), India’s largest small finance bank, today announced the successful completion of capital raise of ₹770 Cr via issuance of Tier-II bonds at a coupon of 9.20%.With thisfund raise, AUSFB has achieved one of the largest bond issuances byany Small Finance Bank amidst adverse market conditions exacerbated by a tight liquidity environment with deal closing on the last working day of the Financial Year 2024-25.

Mr. Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank said, “We are delighted with the significant interest in our Tier-II bond issuance. We thank investors for their continuing faith in us amidst a challenging liquidity environment, and specially, to our long-term partner HDFC Bank. They not only lead-managed this issue but also showed support by investing in the capital raise and we thank them for their longstanding partnership. We remain very well capitalized, and the successful completion of this capital raise is a testament to the strength of our banking franchise and the confidence of our investors. The issue proceeds will boost our future growth trajectory and enable us to extend our digitally powered banking products and services across all parts of the country.”

The current capital raise is expected to increase the capital adequacy ratio of the Bank by~1%.Over all, the Bank remains well capitalised and had an overall capital adequacy ratio of 19.9% at the end of Q3’FY25, including interim profits for 9M’FY25.

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 ₹400 Cr with a green shoe option. It received an overwhelming response,resulting insubscription of approx. twice the base issue.The bank accepted bids for ₹770 Cr, making it one of the largest Tier-II issuances by a small finance bank. These bonds have a 10-year maturity, with a call option exercisable after 5 years from the date of issuance. This issue is rated ‘AA/Stable’ by ICRA & CARE.

Earlier, the Board of Directors of AU SFB, atits meeting held on Friday, 7^th March2025 approved the capital raise via issuance of Non-Convertible Debentures categorized as Tier II Capital.

AU SFB continuously evaluates its capital position asper its businessgrowth plans and had last done capital raise in August 2022 fora total capital of ₹ 2,500Cr comprising ofTierI capitalof₹2,000Crand Tier II capital of ₹500 Cr.

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