Singapore state investment arm Temasek has struck its third back-to-back deal in India this month by inking an agreement to pick up a stake of around 4.8% in AU Small Finance Bank Ltd, it said during the weekend.
Temasek will invest Rs 1,000 crore ($147 million) in the small finance bank through a preferential allotment of shares and convertible warrants.
The securities will be allotted at Rs 692.77 each, AU Small Finance Bank said. The company’s share price rose over 2% early morning and was trading at Rs 704 at 10 AM on Monday in a flat Mumbai market.
This marks the third India-related deal for Temasek this month alone. It backed German firm Schneider to buy L&T’s electrical and automation business unit in a $2.1 billion deal and is close to sealing an investment in IT firm UST Global.
AU Small Finance Bank has its origins in 1996 in Jaipur, and was registered as a non-banking financial company in 2000. It was among the 10 companies to receive the Reserve Bank of India’s in-principle approval in 2015 to start a small finance bank.
The company reported a net profit of Rs 292 crore on revenue of Rs 1,767.19 crore for the financial year ended in March.
It made its stock market debut last year after existing investors sold a part of their stakes in the firm.
At the time of its IPO, investors Warburg Pincus, Kedaara Capital, MYS Holdings Pvt. Ltd, ChyrsCapital Investment Advisors India and International Finance Corporation sold an 18.79% stake via an offer for sale worth around Rs 1,912.51 crore. This included a 2.97% stake sold by promoters Sanjay Agarwal and members of the Agarwal family.
In 2016, a consortium of Partners Group and Kedaara Capital invested in the housing finance arm of AU Financiers Ltd.
In recent times, other small finance banks to have attracted investor interest include Equitas Holdings Pvt Ltd, Ujjivan Financial Services Ltd and Disha Microfin Pvt Ltd. The UK-based development finance institution CDC, which is an investor in AU Financiers also, exited Ujjivan Financial recently with high returns.
The small finance banks had to go public to comply with RBI regulations that make it mandatory for them to be 51% owned by domestic shareholders.