Jana Small Finance Bank IPO: 10 things to know before subscribing to the Rs 570-crore issue

The price band for the issue has been fixed at Rs 399-414 per share.

Jana Small Finance Bank Limited's IPO is set to open for subscription on February 7. The Rs 570-crore issue consists of a combination of fresh shares of Rs 462 crore by the company and an offer-for-sale of shares worth Rs 108 crore by existing shareholders.

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO will open for subscription on February 7 and close on February 9.

2) Price Band

The price band for the issue has been fixed at Rs 393-414 per share.

3.) Offer Details

The company plans to raise Rs 570 crore through this issue. Client Rosehill, CVCIGP II Employee Rosehill, Global Impact Funds, Growth Partnership II Ajay Tandon Co-Investment Trust, Growth Partnership II Siva Shankar Co-Investment Trust and Hero Enterprise Partner Ventures are the selling shareholders in the OFS.

Before launching the issue, the small finance bank raised Rs 113.14 crore through equity shares and CCPS (compulsorily convertible preference shares).

4) Objectives of the Issue

The bank aims to utilise the net proceeds from the fresh issue to bolster its Tier-1 capital base for future capital requirements. Additionally, the funds will cover expenses related to the offer. The bank anticipates gaining advantages from the listing of the equity shares on the stock exchanges.

5) Lot Size

Retail investors can bid for a minimum of 36 equity shares and in multiples of 36 shares thereafter. Consequently, the minimum application size for retail investors will be Rs 14,904 for 36 shares. Retail investors can invest up to Rs 2 lakh in the IPO, making their maximum investment Rs 1,93,752 for 468 equity shares.

6) Company Profile

Incorporated in July 2006, Jana Small Finance Bank Limited is a non-banking finance company primarily engaged in providing MSME loans, affordable housing loans, term loans to NBFC, loans against fixed deposits, two-wheeler loans, and gold loans. The bank offers various unsecured loan products, including individual and micro business loans, agricultural and allied loans, and group loans.

7) Financials of the Company

For the year ended March 2023, the company reported a total revenue of Rs 5,856 crore as against Rs 5,347 crore it reported during the same period the previous year.

8) Lead Managers

Axis Capital Limited, ICICI Securities Limited and SBI Capital Markets Limited are the book-running lead managers of the Jana SFB IPO, while Kfin Technologies Limited is the registrar for the issue.

9.) Key Risks

i.) The company's unsecured loans carry a higher credit risk against its secured loans, primarily due to the majority being microfinance loans. Additionally, unsecured loans lack collateral support. Failure to recover these advances on time or at all could adversely affect the bank's financial condition, results of operations, and cash flows.

ii.) Many of the banks' customers do not have any credit history supported by tax returns, financial statements, credit card statements, statements of previous loan exposures or other related documents, which makes it more difficult for it to assess the credit risk of loans to such customers. Difficulties in assessing credit risks could have a material adverse effect on the business, financial condition, results of operations and cash flows.

iii.) The bank incurs significant operating expenses and any increase in these operating expenses without a corresponding increase in Jana's operating income will adversely affect the lender's financial condition, results of operations and cash flows.

10.) Listing Date

Jana SFB IPO will likely list on BSE and NSE with a tentative listing date fixed on February 14.