Jana Small Finance Bank, headquartered in Bengaluru, has successfully raised approximately ₹1,200 crore in fresh debt from shareholders TPG Capital and GIC, Singapore’s sovereign wealth fund, according to sources familiar with the matter.
The funds raised were utilized by the bank’s holding companies to redeem non-convertible debentures (NCDs) that matured at the end of May, including the accrued interest. These NCDs were primarily held by TPG and GIC themselves.
Issued in 2017 and 2018, the NCDs provided much-needed capital infusion to the bank, which had faced significant challenges due to a substantial pile of bad loans following the government’s demonetization drive in late 2016.
During the financial year 2018, the bank witnessed a sharp increase in gross non-performing assets, reaching approximately 42%. It reported substantial losses for two consecutive fiscal years, amounting to ₹2,504 crore in FY18 and ₹1,949 crore in FY19.
The new NCDs have been issued to TPG and GIC through Jana Capital Ltd and Jana Holdings Ltd, two holdcos of the bank. This refinancing initiative effectively addresses redemption pressure at the holdco level, with existing shareholders reaffirming their support for the bank, as stated by one of the sources.
While the previous NCDs had a maturity period of 5-6 years with a coupon range of 4.95-5.05%, the new NCDs have a tenure of three years and will mature in June 2026. They carry a coupon rate of 3%. The overall return on the NCDs at maturity is expected to be close to mid-teens, according to an informed individual.
By securing this significant refinancing, Jana Small Finance Bank strengthens its financial position and paves the way for sustainable growth, enabling it to continue serving its customers and contributing to the development of the banking sector in India.