Au Small Finance Bank looks to join larger peers in quest for capital

Jaipur-based Au Small Finance Bank Ltd is looking to join its larger peers in the banking industry in fundraising initiatives as the lender’s board is set to meet on 2 May to consider options to raise capital.

 

The bank has informed the stock exchanges that its board will meet on Saturday to consider various fundraising options. While the bank did not disclose the quantum of capital that it might seek to raise, it said that it is exploring fundraising routes such as qualified institutional placement (QIP) and preferential allotment of shares.

As of 9.45 am, the stock was trading at ₹563.9 per share, up 4.91% on the BSE, following the news about its plans to contemplate fundraising.

 

With its plans, Au joins several of its larger banking peers such as Kotak Mahindra Bank Ltd, RBL Bank, IndusInd Bank Ltd, Yes Bank Ltd, IDFC First Ltd and others which are looking to raise up to ₹35,000 crore to shore up balance sheets

Lenders are eyeing equity capital infusion to bolster their capital base and arrest any erosion in their capital adequacy.

There are widespread apprehensions that the countrywide suspension of businesses due to the nationwide lockdown will result in borrowers finding it tough to repay loans, which may increase bad loans and force lenders to go for higher provisioning and loan write-offs.

private lenders IDFC First Bank and RBL Bank plan to raise ₹1,800-2,000 crore each.

Au Small Finance Bank last raised equity capital in June 2018, when Singapore’s Temasek subscribed to the bank’s shares and warrants worth ₹1,000 crore through a preferential allotment.

For the quarter ended 31 March, the bank’s total deposit base grew 9% to ₹26,163 crore compared with the preceding quarter