The ₹832-crore initial public offering (IPO) of Tamilnad Mercantile Bank (TMB) will be open for public subscription from September 5 to 7. The price band for the fresh issue of up to 1.584 crore shares has been fixed as ₹500-525 a share. Investors can bid for a minimum of 28 sharesr.

While 75 per cent of the fresh issue has been reserved for qualified institutional buyers, of which up to 60 per cent may be allotted to anchor investors, 15 per cent has been reserved for non-institutional buyers and the remaining 10 per cent for retail investors.

IPO proceeds

TMB said that it will use the proceeds from the IPO for augmenting its tier-I capital base to meet future capital requirements, “which are expected to arise out of growth in the bank’s assets, primarily the bank’s loans/advances and investment portfolio”.

Axis Capital Ltd, Motilal Oswal Investment Advisors Ltd and SBI Capital Markets Ltd are the book-running lead managers to the IPO.

The IPO will pave the way for TMB to resume its branch expansion and growth plans, according to MD and CEO KV Rama Moorthy, who said that the bank will be seeking the RBI’s approval for branches once the shares of the bank are listed.

Missed RBI deadline

The Thoothukudi-based private sector bank had missed the December 2021 deadline set by the RBI for its IPO, following which the bank was barred from expanding operations and also faced curbs on key management personnel.

“It was stifling us, not being able to open branches. This will help us grow,” Moorthy said, adding that the bank is aiming to become a pan-India bank rather than a region-concentrated entity.

Once it receives regulatory approvals, the bank will look to expand operations outside of Tamil Nadu, and also selectively in some urban locations of the State, he said.

Currently, TMB has 509 branches, of which 369 are in Tamil Nadu The bank has a customer base of 49.3 lakh.

Moorthy said going forward, the bank will focus on third-party selling, and digital on-boarding of liability customers and retail and MSME borrowers.

‘Diversified’ shareholding

Addressing concerns regarding the shareholding of the bank, Moorthy said TMB had started as a community-driven bank, but today the shareholding is diversified and fragmented.

“Listing will not break the community holding, but will help us broad base the shareholding pattern,” he said, adding that even though it was started as a Nadar community bank, it has always been run like a private sector lender — both in terms of shareholding and business operations.

The bank has over 22,000 investors and shareholders, including six foreign institutional investors who collectively hold 23.2 per cent stake. Around 37 per cent of the bank’s shares are under various legal and regulatory disputes, and the bank is also undergoing investigations by the RBI and Enforcement Directorate.

comment COMMENT NOW