Jana Small Finance Bank promoter to sell stake, hopes for a merger too

Jana Holdings Ltd is ready to give up its status as the promoter of Jana Small Finance Bank by selling its stake to repay the debt it owes to Singapore-based private equity firm TPG Asia, the bank told exchanges. A potential merger with a peer bank is also under consideration,a source close to the management told CNBC-TV18.

Jana Holding owes TPG Asia roughly ₹700 crore for 37,000 non-convertible debentures issued in May 2023, which were due on June 30. However, the lender agreed to roll it over after Jana Holdings agreed to sell its stake in the ₹5,000-crore small finance bank, which listed on the stock exchange in February 2024.

This rollover of debt between two parties was agreed on June 22. CNBC-TV18 has seen and reviewed the June 22 letter from TPG Asia to the Bombay Stock Exchange confirming the rollover. Shares of Jana Small Finance Bank have gained just about 12% from their issue price.

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Jana Holding holds a 16.95% stake in Jana SFB —valued at over ₹800 crore as of market close on July 1—down from 44% at its inception in 2016. TPG Asia is the second-largest shareholder with a 7.91% stake. Jana Holdings will remain the largest shareholder even after selling a 7% stake, according to the current plan, sources said.

It is pertinent to note that Jana Holdings Limited, on May 18, 2026, agreed with TVS Motor Company Limited for the sale of 5.1 million shares, representing approximately 4.9%, for a consideration of ₹193 crore. As per TPG’s letter to the BSE, this sum would also be used to repay debt.

The impending supply from the promoter’s kitty could act as a dampener for the existing shareholders (including TPG Asia) of Jana SFB, analysts at Ind-Ra, the ratings agency, warned earlier today. However, the promoter expects about ₹600 apiece, a good 30% premium over the current price, according to source.

While the promoter may be in ‘distress’, as the ratings agency that downgraded the debt on Wednesday described, the outlook for the listed small finance bank was encouraging enough for the lender to hold on.

The management reportedly projected 80% growth in after-tax profit for the financial year ending March 2027 during a call with analysts following the latest quarterly earnings.

It is also considering a merger that may unlock value. “After the flow of foreign capital into the big banks, the possibility of a merger is on everyone’s mind in smaller banks. This would lead to a consolidation at a lower level. Only then can smaller banks compete with the top six,” the source added. The holding company would also tender its shares in a merger.

CNBC-TV18 reached out to both Jana Small Finance Bank and Jana Holdings. While Jana SFB declined to comment, responses from Jana Holdings are awaited. TPG Asia declined to comment.