Jana Small Finance Bank IPO Subscribed 18.50 times

Jana Small Finance Bank IPO has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹393 to ₹414 per share. The IPO of Jana Small Finance Bank Ltd will be a combination of a fresh issue of shares and offer for sale (OFS). While the fresh issue tends to bring in fresh funds into the company, it is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The fresh issue portion of the IPO of Jana Small Finance Bank Ltd comprises the issue of 1,11,59,420 shares (111.59 lakh shares approximately), which at the upper price band of ₹414 per share will translate into a fresh issue size of ₹462 crore.

The offer for sale (OFS) portion of the Jana Small Finance Bank IPO comprises the sale of 26,08,629 shares (26.09 lakh shares approximately), which at the upper price band of ₹414 per share will translate into an OFS size of ₹108 crore. The OFS size of ₹26.09 lakh shares will be entirely offered by investor shareholders. Among the investor shareholders offering shares in the OFS are Client Rosehill Ltd, CVCIGP II Employee Rosehill Ltd, Global Financial Inclusion Fund, Growth Partnership II, Hero Enterprise Partner Ventures. Thus, the total IPO of Jana Small Finance Bank Ltd will comprise of a fresh issue and an OFS of 1,37,68,049 shares (137.68 lakh shares approximately) which at the upper end of the price band of ₹414 per share aggregates to total issue size of ₹570 crore.

The IPO of Jana Small Finance Bank Ltd will be listed on the NSE and the BSE on the IPO mainboard. The promoters currently hold 25.20% in Jana Small Finance Bank Ltd, which will get diluted post the IPO. The IPO will be lead managed by Axis Capital, ICICI Securities and SBI Capital Markets. KFIN Technologies Ltd will be the registrar to the IPO.

How subscriptions evolved in the IPO period

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was rapid for retail investors. The QIB portion only got fully subscribed on the last day of the IPO while the retail portion and the HNI portion got just about fully subscribed on the first day of the IPO itself. The overall IPO also saw the subscription book falling just short of full subscription on Day-1, but it was done on the second day. The IPO was kept open for a total period of 3 consecutive trading days.

While the retail portion did start off strong, the eventual traction was just about modest; next to the QIB and the HNI / NII portion respectively. Here is the day-wise progress in IPO subscription of the total available quota. The available QIB quota in the table below represents the oversubscription; is net of the anchor allocation of shares, done one working day prior to the opening of the IPO.

As can be seen from the above table, the overall IPO got 18.50 times subscribed at the close of the third and final day of the IPO on 09th February 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.14 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.19X to 38.75X.
   
• The HNI / NII portion got 1.28 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 3.18X to 25.05X.
   
• Retail portion got 1.27 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 2.42X to 5.46X.
   
• The overall IPO got 0.96 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 1.98X to 18.50X.

Rapid update on the overall IPO response

The IPO saw fairly steady response on the Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO, as is normally the case. However, the IPO did close with relatively healthy subscription numbers at the close of Day-3. In fact, the IPO of Jana Small Finance Bank Ltd got fully subscribed on the second day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, Jana Small Finance Bank Ltd IPO was subscribed 18.50X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the Retail segment in that order.

In fact, the institutional QIB segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively less aggressive, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was a tad more cautious. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments. These, however, do not impact the total number of shares materially.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 09th February 2024, out of the 101.16 lakh shares on offer in the IPO, Jana Small Finance Bank Ltd saw bids for 1,871.97 lakh shares. This implies an overall subscription of 18.50X at a macro level. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and the Retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 06th February 2024, Jana Small Finance Bank Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 40,32,588 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹414 per share (including premium of ₹404 per share) which resulted in an overall allocation of ₹166.95 crore. The anchors absorbed 29.29% of the total issue size of ₹570 crore.  It may be noted that half the anchor portion is locked for 1 month from the date of allotment i.e. up to March 13th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to May 12th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 27.62 lakh shares of which it has got bids for 1,070.31 lakh shares at the close of Day-3, implying a subscription ratio of 38.75X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Jana Small Finance Bank Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 25.05X (getting applications for 526.91 lakh shares against the quota of 21.03 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 27.54X while the below ₹10 lakh bid category (S-HNIs) got subscribed 20.07X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 5.46X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 49.07 lakh shares on offer, valid bids were received for 268.04 lakh shares, which included bids for 231.59 lakh shares at the cut-off price. The IPO is priced in the band of (₹393 to ₹414 per share) and has closed for subscription as of the close of Friday, 09th February 2024.