Shares of Jana Small Finance Bank rose nearly 2.5% in early trade on Thursday after a CNBC-TV18 report said promoter Jana Holdings Ltd is planning to pare its stake in the lender, give up its promoter status and explore a merger with a peer bank.
At 10:59 am, Jana Small Finance Bank shares were trading 2.49% higher. The stock later traded at Rs 476.60, up 1.87%, at 11:05 am.
Citing sources, CNBC-TV18 reported that Jana Holdings is prepared to sell around a 7% stake in the bank, reducing its holding to below 10%, with the proceeds to be used to repay around Rs 700 crore owed to Singapore-based private equity firm TPG Asia.
The report also said Jana Holdings is evaluating a potential merger of Jana Small Finance Bank with another small finance bank.
According to the report, TPG Asia rolled over Jana Holdings' loan by six months on June 30, giving the holding company more time to complete the proposed stake sale. Jana Small Finance Bank and TPG Asia declined to comment, while Jana Holdings' response is awaited.
The development follows India Ratings & Research's downgrade of Jana Capital after the maturity of its non-convertible debentures was extended. The rating agency had noted that Jana Holdings and Jana Capital are non-operating entities with no independent cash flows and were expected to meet repayment obligations either through a stake sale in Jana Small Finance Bank or by refinancing the debt.