NE BUSINESS BUREAU
AHMEDABAD, SEP 1
The Rs 832-crore initial public offering (IPO) of 101-year old 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 shares, virtually announced Managing Director and Chief Executive Officer KV Rama Moorthy here on Thursday.
When asked why it was too late to come out with an IPO, MD & CEO KV Rama Moorthy said, “The reason for which I am tapping the market is more in terms of compliance.”
“Since the Reserve Bank has been after us to get ourselves listed because we are a loan [providing] entity, there was need for listing. We have been in existence for the last 100 years and we are the only unlisted entity in the [banking] system.”
He said the listing would lead to dilution of 10% stake of the promoters. “The entire amount is fresh issue and we are very confident about this,” he said.
While 75 percent of the fresh issue has been reserved for qualified institutional buyers, of which up to 60 percent may be allotted to anchor investors, 15 percent has been reserved for non-institutional buyers and the remaining 10 percent for retail investors.
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”.
- The IPO will pave the way for TMB to resume its branch expansion and growth plans: Managing Director and Chief Executive Officer KV Rama Moorthy
- The listing would lead to dilution of 10% stake of the promoters
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.
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.
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.
Gujarat branches performing well
Answering a query on the bank’s Gujarat operations, P Suriraj, GM, HRD/Integrated Treasury/Establishment Department, TMB said, “The bank has 21 branches in Gujarat. Out of them, Unjha branch in North Gujarat is the top performer. Our Surat branch caters to the growth of MSMEs there while Ahmedabad branches contribute a lot to our business growth.”
Bank’s DGM PR Ashokkumar, Gujarat Regional Manager J Lakshmiprakash and Ahmedabad Chief Manager R Deivaraj were present at the IPO press meet.
