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Jana Small Finance Bank Sets IPO Price Band at Rs 393-414 per Share, Offer Opens February 7

Bengaluru based Jana Small Finance Bank has set the price band for its upcoming initial public offering (IPO) at Rs 393-414 per share. The IPO will open for subscription on February 7 and close on February 9.

The IPO comprises fresh issuance of equity shares worth Rs 462 crore and an offer for sale of 26,08,629 shares by existing shareholders. At the upper end of the price band, the IPO will fetch Rs 570 crore.

Jana Small Finance Bank provides micro loans, affordable housing loans, term loans to NBFCs, loans against fixed deposits, two-wheeler loans and gold loans. The bank serves over 6.1 million customers through its 554 bank branches spread across 16 states and 2 union territories.

About the IPO

  • IPO dates: February 7-9, 2023
  • Price band: Rs 393 – 414 per share
  • Fresh issue: Rs 462 crore
  • Offer for sale: 26,08,629 shares
  • Issue size: Rs 570 crore at upper price band
  • Lot size: 36 shares

Objective of Fresh Issue

The proceeds from the fresh issue worth Rs 462 crore will be used for augmenting the tier-1 capital base to meet future capital requirements.

Details of Offer for Sale

The following shareholders will offload 26,08,629 shares via offer for sale

  • Rosehill – Client: 7,970,155 shares
  • CVCIGP II Employee Rosehill: 1,225,225 shares
  • Global Impact Funds: 801,944 shares
  • Growth Partnership II Ajay Tandon Co-Investment Trust: 492,795 shares
  • Growth Partnership II Siva Shankar Co-Investment Trust: 349,800 shares
  • Hero Enterprises Partner Ventures: 3,68,710 shares

Proceeds from the OFS will go to the selling shareholders.

Key Investors

Jana Small Finance Bank completed a pre-IPO placement of 24,39,607 shares at Rs 414 per share, aggregating to Rs 101 crore. The investors included SBI General Insurance, Kotak Mahindra Life Insurance, Ananta Capital Ventures Fund, Arka Nxt Ventures, Capri Global Holdings and RPM Ventures Partners.

IPO Reservations

  • QIB portion: 50%
  • NII portion: 15%
  • Retail portion: 35%
  • Reserved for employees: Rs 13.50 crore

Financial Snapshot

For FY22, Jana Small Finance Bank reported a net profit of Rs 230 crore on a total income of Rs 1,037 crore. As of September 2022, the bank’s gross loan book stood at Rs 9,045 crore with a deposit base of Rs 9,904 crore.

Jana Small Finance Bank’s tier-1 capital adequacy ratio stood at 23.4% as of September 2022. Its gross NPA ratio was at 5.3% while net NPA ratio stood at 1.9%.

Should you invest?

Jana Small Finance Bank has witnessed healthy growth in its loan book at a CAGR of 30% between FY20 and FY22. However, its asset quality deteriorated during the pandemic. Its profitability also remains modest compared to larger peers.

At the upper end of the price band, the IPO is valued at 3.1 times its FY22 book value. Investors can consider subscribing for listing gains given the reasonable valuations. However, it may not be suited for long-term investors given the challenges in the microfinance sector.

Axis Capital, ICICI Securities and SBI Capital Markets are the book running lead managers for the IPO. Kfin Technologies is the registrar. Shares of Jana Small Finance Bank are proposed to be listed on BSE and NSE on February 14.

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