Jana Small Finance Bank has raised fund?
Blog
Planify Feed
Ramesh Damani, Ashish Kacholia & others invest Rs 560 cr in Jana Bank
  • news
    Ramesh Damani, Ashish Kacholia & others invest Rs 560 cr in Jana Bank

    29 June 2023

    Bangalore-based Jana Small Finance Bank has raised Rs 560 crore in pre-IPO (initial public offer) financing by a set of investors that include high networth individuals (HNIs) and funds even as it prepares to become the fifth small-finance lender to list its stock.


    The bank raised the money this week in which investors like Enam Holdings' Akash Bhanshali, Ashish Kacholia, noted investor Ramesh Damani and Akash Prakash's Amansa Holdings participated.

    The fresh strengthens the bank's capital adequacy to more than 19% from just above the regulatory requirement of 15% at the end of March. CEO Ajay Kanwal said the bank is planning to also sell at least Rs 1,500 crore worth of shares in an IPO later this year for which a draft prospectus will be filed as early as next month. "More than Rs 500 crore of the amount raised from the IPO will be a fresh issue of shares and will come directly into the bank and improve our capital adequacy above 23% which will give us a good base to grow," Kanwal said. Other bank shareholders include private equity firms TPG Capital, Morgan Stanley Private Equity, electric appliance company Havells Group besides Amansa and Enam all of whom own more than 9% stake. When listed the bank will be the fifth small finance bank on the bourses after AU, Equitas, Suryoday and Ujjivan. There are 12 small finance banks (SFBs) licensed in India. These banks can do everything a full service lender can but 75% of their loans have to be to agriculture and weaker sections of society and 50% of loans should be below Rs 25 lakhs ticket size. Jana has to list this year since RBI regulations mandate that all SFBs have to list within five years of starting operations. Jana started operations at the end of March 2018 and had to delay its IPO which was first planned in 2021 because of post Covid volatilities. The bank also recovered from a shock post demonetisation at one time reporting gross NPAs of 42% at the end of March 2018 as loan recoveries were hit. It also slowed down lending in fiscal 2021 when post Covid uncertainties were at their peak.

    Gross NPAs have since come down to 3.90% at the end of March 2023 and loan book has grown more than 30% last fiscal as the bank pivots towards secured lending.

    "Our unsecured micro finance book is about 45% of our total loans. We plan to reduce it to 15% to 20% in the next three years because we have seen it's a risky business. Affordable housing, loans against property and secured loans to MSMEs are where we think the growth comes from," Kanwal said.

    Total advances at the end of March 2023 were Rs 17,760 crore up from Rs 13,007 crore a year ago.

    Kanwal said since the bank has now completed five years RBI norms allow it to dilute its promoter holding below 40% which will open up space for fresh investors and make it easier for the bank to raise funds.

    After this pre IPO funding the promoter stake in the bank has fallen to 36% from 42.5% and is likely to reduce further to 28% after the IPO, he said.

    Image