Jana SFB IPO Nears Full Subscription; Retail, HNIs Bid 1.2x

Nearly fully subscribed Jana SFB IPO: 1.2x bids show strong interest from retail and HNI investors

The Jana SFB IPO, a scheduled commercial bank that serves underserved areas of the Indian population with banking and financial services, started on February 24, 2024, and has received positive feedback from investors. As of 5 p.m. on February 25, 2024, bids for 6.8 crore shares, or 0.98 times the total issue size of 6.9 crore shares, have been received for the initial public offering (IPO), which intends to generate Rs. 700 crore (NSE). On February 26, 2024, the IPO will end.

The IPO was well-received by retail individual investors (RIIs) and non-institutional investors (NIIs), or high net worth individuals (HNIs), who placed bids that were 1.2 times higher than their respective limits. In comparison to the reserved part of 3.3 crore shares, the RIIs bid for 3.9 crore shares, while the NIIs bid for 1.4 crore shares. But the qualified institutional buyers (QIBs) placed smaller bids just 0.4 times their quota evidence of their greater caution. Against the 3.4 crore shares that were reserved, the QIBs placed a bid for 1.5 crore shares.

In the IPO, current shareholders, including the promoter Jana Capital, would make an offer for sale (OFS) of Rs. 200 crore in addition to a new issuance of Rs. 500 crore. The bank is valued at Rs. 4,400–4,500 crore at the top end of the pricing range, which has been set at Rs. 87–90 per share for the initial public offering. The bank plans to cover its future capital needs, expand its tier-1 capital base, and use the net proceeds from the new issuance for general business purposes. With the IPO, the bank also hopes to improve its brand awareness and perception among current and future clients.

The Reserve Bank of India (RBI) granted Jana SFB a small finance bank license in 2017. The company was first established in 2006 as a microfinance firm. Savings accounts, current accounts, fixed deposits, recurring deposits, microloans, small company loans, loans for affordable housing, gold loans, and institutional financing are just a few of the many goods and services that the bank provides. In addition, the bank offers digital banking services including UPI, mobile and online banking, Aadhaar-enabled payment systems, and internet banking.

The bank covered 20 states and union territories in India as of December 31, 2023, with a network of 610 branches and 105 asset centers. The bank has 4.1 million customers and a Rs. 11,873 crore loan portfolio. In the nine months that ended December 31, 2023, the bank had revenue of Rs. 2,111 crore and a net profit of Rs. 174 crore.

Additional banks and non-banking financial firms (NBFCs) that serve the same target segments compete with the bank, including Ujjivan SFB, Equitas SFB, AU SFB, and Suryoday SFB. Regulations include the foreign ownership restriction, the lending rate limitation, the priority sector lending standards, and the obligation to list within three years of starting operations provide additional risks to the bank. ICICI Securities, IIFL Securities, SBI Capital Markets, and Axis Capital are managing the initial public offering (IPO). An NSE and BSE listing for the bank's shares is being considered.