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Singaporean wealth fund Temasek picks up 4.8 % in AU Bank for $74 mn

Singaporean sovereign wealth fund Temasek, through its wholly-owned subsidiary Camas Investments Pte, has picked up a 4.8 per cent stake in Indian lender AU Small Finance Bank (AU SFB) for around $74 million (INR 5.2 billion).

Temasek has invested the money through the conversion of its 1.01 crore warrants and it is the fund’s second investment in the Jaipur-based lender. In June 2018, Temasek had pumped in INR 10 billion ($141 million) in the small finance lender.

AU SFB, which is listed on Indian exchanges, has a total market capitalization of INR 170 billion Some of the other marquee investors in the bank include IFC, Warburg Pincus, Nomura, SBI MF, and Kotak Mahindra MF.

The investment has increased the small finance bank’s (SFBs) net worth at INR 40 billion ($600 million), a cut-off threshold level for government business and also increases the bank’s capital adequacy.

Sanjay Agarwal, MD CEO of AU Bank, in a statement, said, “The completion of Temasek’s investment is a 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.”

AU SFB, which became a small finance bank in April 2017, has operations across over 500 touchpoints including 395 bank branches, 96 asset centres, 28 offices and 292 ATMs across 11 states.

Started in Rajasthan in 1996 as a vehicle finance lender, AU SFB has been serving the unserved and underserved segments of the country since long. The bank’s total business (Cumulative Advance and Deposits) crossed more than INR 450 billion in first 10 quarter of its operations and it aims to become a universal bank once it completes five years of operations, a guideline set by the banking regulator Reserve Bank of India.

The bank is now a retail-focused and customer-centric institution, serving the low and middle-income individuals along with micro and small businesses that have limited or no access to formal banking and finance channels. The bank offers a comprehensive suite of loan, deposit and payment products and services.

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