Tamilnad Mercantile Bank IPO: Open date, price band and more about Rs 832-crore initial share offer

The century-old private sector lender Tamilnad Mercantile Bank on Tuesday fixed the price band at Rs 500-525 per share for the Rs 832-crore initial share offer that will open on September 5.

At the upper end of the price band, the Tuticorin-based lender, which does not have any identified promoter/promoter group as it is widely held by over 22,000 investors/shareholders -- including half a dozen foreign institutional investors who collectively own 23.2 per cent in the bank, is expected to mobilise Rs 831.6 crore through the IPO that will close on September 7.

The six foreign investors are Robert & Ardis James Company (4.95 per cent), Starship Equity Holdings (4.72 per cent), Subcontinental Equities (4.64 per cent), East River Holdings (3.72 per cent), Swiss Re Investors Mauritius (1.90 per cent) and FI Invest Mauritius (1.48 per cent), according to the final IPO filing.

These shareholders will have to retain their holdings for the next six months after the IPO.

The bank, which had assumed the present name in 1962, will be issuing 1.58 core new equity shares of Rs 10 face value in the IPO, which constitute 10 per cent of its equity shares. Its managing director and chief executive KV Rama Muthry said with this, the bank does not come under the Sebi norm of 25 per cent minimum public shareholding as it is already fully owned by shareholders.

The management said as much as 37.73 per cent or 53.76 million shares of its equity shares are under various legal and regulatory disputes and the bank is also under probe by the RBI and the Enforcement Directorate and that any negative outcomes will be costly for the bank and its shareholders.

It can be noted that the bank had missed the December 2021 deadline set by the RBI for the IPO, which then led to the bank being barred from expansion and curbs on its key management personnel.

The IPO will be a fresh issue of 1.58 crore equity shares and the bank proposes to utilise the proceeds to augment its core capital, which will touch 25 per cent from the present 22 per cent post issue and also meet future capital requirements.

Tamilnad Mercantile Bank is one of the oldest private sector banks with a history of 101 years, having been established in 1921 as Nadar Bank.

The bank offers a wide range of services primarily to micro, small and medium enterprises, agricultural and retail customers.

These three verticals forms over 80 per cent of its business and 99 per cent of which is secured, its general manager, accounts, Surya Raja told reporters here.

As a result, the bank has one of the best asset qualities with net NPAs at 0.9 per cent and gross NPAs at 1.65 per cent of the total loan book of Rs 33,000 crore, Raja added.

The bank reported a net income of Rs 8,212 crore in fiscal 2022 on an income of Rs 4,656.4 crore, which stood at Rs 603.3 crore and Rs 4,253 crore in FY21, respectively, and Rs 407.6 crore and Rs 3,992.5 crore in FY20.

The bank has reserved 75 per cent of the issue for qualified institutional investors, 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.

The bank operates 509 branches of which 369 are in the home state of Tamil Nadu, which fetches over 70 per cent of business and the rest of the branches are spread across 15 states and four Union territories, Murthy said.

Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are the book-running lead managers for the public issue. The equity shares will be formally listed on the BSE on September 15.