Jana Small Finance Bank has received markets regulator Sebi's go-ahead to raise funds through an initial share-sale.
The initial public offering (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, according to the draft red herring prospectus (DRHP).
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.
The small finance bank, which filed preliminary IPO papers with Sebi in April, obtained its observations on July 9, an update with Sebi showed on Monday.
Sebi's observations are necessary for any company to launch public issues like IPO, follow-on public offer (FPO) and rights issue.
According to merchant banking sources, the IPO is expected to fetch Rs 1,100 crore.
Going by the draft papers, the small finance bank proposed to utilise the net proceeds from the fresh issue towards augmenting its Tier-1 capital base to meet future capital requirements.
Further, the proceeds will also be used for meeting the expenses in relation to the offer.
Jana Small Finance Bank may also 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 aggregating up to Rs 400 crore.
The pre-IPO placement, if undertaken, will be completed prior to filing of the red herring prospectus 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 lender 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 (micro, small and medium enterprises), agriculture, individuals, affordable housing and two-wheeler buyers, and also provides gold loans to customers.
Jana Small Finance Bank is one of the 10 financial institutions which had received in-principle approval from the RBI for a small finance bank in 2015. The bank received its final banking licence in April 2017.
Axis Capital, ICICI Securities and SBI Capital Markets are the merchant bankers to the issue.