Tamilnad Mercantile Bank sets price band of up to Rs 525 for Rs 832-cr IPO

Tamilnad Mercantile Bank sets price band of up to Rs 525 for Rs 832-cr IPO

The century-old south-based private sector lender Tamilnad Mercantile Bank (TMB) has set a price band of Rs 500-525 a share for its `832-crore initial public offering (IPO), which opens on September 5 and closes on September 7.

The IPO consists of a fresh issue of 15.8 million equity shares and the bank is expected to raise more than Rs 800 crore. The stock will start trading on September 15 with a retail quota of 10%, QIB 75% and HNI 15%.

TMB intends to use the net proceeds from the offering to increase its tier-I capital base in order to achieve its capital requirements and reap the benefits of being listed on stock markets. The private bank has 50.8 million customers with nearly 85% of these from Tamil Nadu.

KV Rama Moorthy, MD & CEO, TMB, said the IPO would have only fresh issues as there is no offer-for-sale (OFS) by the existing investors. “Earlier, we had planned the OFS, but due to the delay in getting approvals, the portion was withdrawn,” he said. Around six existing investors had earlier offered to sell shares through OFS. After the IPO, the bank’s capital adequacy ratio would be enhanced by 3% from 22% to 25%.

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The bank had filed its draft red herring prospectus (DRHP) in early September 2021 and subsequently with the NSE and BSE. It was supposed to be get listed by December 2021 as per the RBI norms. Market regulator Sebi had given the nod for the IPO in the first week of June 2022.

TMB has a network of 509 branches, of which 369 are in Tamil Nadu – about 70% of the bank’s business. The lender said 88.14% of its asset size is being contributed by the retail, agri and micro small and medium enterprises (RAM) segment. “Going forward, we would continue with the same focus in lending as it had yielded good results for us,” he said.

Post IPO, the bank would be going in for net work expansion. According to him, the bank would have a vision document on this and every year, it will be going in for branch expansion.

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TMB’s gross non-performing assets in 2021-22 stood at 1.69% against 3.44% in 2020-21 Similarly, the bank’s net NPA was at 0.95% compared to 1.98% in 2020-21.