AU Bank (AU) announced that Temasek, via its wholly-owned subsidiary Camas Investments Pte. Ltd, has invested Rs. 525 Crores towards conversion of their 1,01,04,364 warrants. Pursuant to this conversion Temasek has firmed up their stake at 4.8% in AU Bank.
Though the said transaction is part of Temasek’s original commitment in Jun 2018 to invest INR 1000 Crores (US$141 million) in AU, it holds importance due to the following:
- AU’s Net Worth now increases to more than INR 4000 Crores, a cut-off threshold level for government business, at few places.
- It also further bumps up AU Bank’s capital adequacy and core tier 1 capital which even before was healthy at 19.7% and 16.7% respectively as on 30th September 2019. Additionally, both the net worth and capital adequacy is expected to further improve as and when AU divests its investment in a leading housing finance company currently valued around INR ~950 Crores.
Headquartered at Jaipur Rajasthan, AU had started its financial inclusion journey way back in the year 1996. For past 24 years it has been serving the unserved and underserved segments and it has built a granular portfolio of secured retail assets of nearly Rs. 28,000 Crores. Post becoming a small finance bank in April 2017, it has grown quickly and with more than 600 touch points across 11 states, AU Bank ‘s total business (Cumulative Advance and Deposits) crossed more than INR 45,000 Crores in first 10 quarter of its operations while maintaining granularity and stable asset quality.
AU post recent amendments is expected to become a full-fledged Universal Bank once it completes its first five years as a small finance bank.
Commenting on the occasion and overall performance, Mr. Sanjay Agarwal, MD & CEO of AU Bank said, “The completion of Temasek’s investment is reflection of the uniqueness of our secured retail and steadily growing granular deposit franchise, our stable portfolio quality, our margins and growth headroom. We are extremely thankful to Temasek for once again reposing their trust in us amidst a challenging macro environment”, he said.
Disclosure: I am invested in AU Bank.