Small finance banks are in a rush to raise money through public float. Soon after Suryoday Small Finance Bank, it is the turn of Jana Small Finance Bank to tap the capital market through an initial public offering (IPO).

Being one of the 10 entities that received the small finance bank licence in 2015, Jana Small Finance Bank on Thursday filed its draft red herring prospectus (DRHP) with markets regulator Sebi for an IPO.

The IPO comprises fresh issuance of equity shares worth Rs 700 crore and an offer for sale of up to 92,53,659 shares by existing shareholders. The IPO size is expected to be Rs 1,100 crore.

Those selling shares in the offer-for-sale include Bajaj Allianz Life Insurance Company, Hero Enterprise Partner Ventures, ICICI Prudential Life Insurance Company, Enam Securities, North Haven Private Equity Asia Platinum Pte Ltd, QRG Enterprises and Tree Line Asia Master Fund (Singapore) Pte Ltd are selling shares in the offer for sale.

Out of the net proceeds from the proposed issue, the small finance bank proposes to augment its Tier – 1 capital base to meet future capital requirements.

Jana Small Finance Bank, which received its final banking licence in April 2017, may consider a pre-IPO placement of an aggregate amount not exceeding Rs 500 crore, including by way of a proposed further issue to its promoters for an amount of up to Rs 400 crore.

The pre-IPO placement, if undertaken, will be completed prior to filing of the DRHP with the Registrar of Companies (RoC).

In case the pre-IPO placement is undertaken, the amount raised will be reduced from the fresh issue.

The small finance bank serves underbanked customers through various products, including zero balance savings accounts, fixed deposits with attractive interest rates, collateral-free loans and affordable housing loan schemes.

It offers loans to MSMEs, agriculture sector, individuals, affordable housing sector and two-wheeler buyers.

The small finance bank also provides gold loans to customers.

Axis Capital, ICICI Securities and SBI Capital Markets have been appointed as merchant bankers to the issue.

As of March 2018, Jana Small Finance Bank’s gross non-performing assets ratio rose to 42.2%. This came down to 8% as of March 2019 and 1.4% as of March 2020. The gross NPA ratio was at 2.72%, as of September 2020.

In FY18, Jana Small Finance Bank reported a net loss of Rs 2,411 crore, which came down to Rs 1,949 crore in the next fiscal. In FY20, the bank swung bank to a profit of Rs 30 crore.