TamilNad Mercantile Bank (TMB) is eyeing to raise funds from the primary markets via an initial public offering (IPO). The lender has filed its draft red herring prospectus (DRHP) with the capital markets regulators for the same.
According to the DRHP, the bank will issue 15,840,000 equity shares with a face value of Rs 10 each. The issue will consist of the issuance of fresh equity of 15,827,495 equity shares and an offer for sale (OFS) of 12,505 equity shares by existing shareholders.
Investors participating in OFS include D. Prem Palanivel (up to 5,000 equity shares), Priya Rajan (up to 5,000 equity shares), Prabhakar Mahadeo Bobde (up to 1,000 equity shares), Narasimhan Krishnamurthy (up to 505 equity shares), M. Malliga Rani (up to 500 equity shares) and Subramanian Venkiteshwaran Iyer (up to 500 equity shares).
The bank is not considering any issuance or placement of equity shares by way of pre-offer placement from the date of the DRHP filing until the listing of the equity shares on the exchanges.
Tuticorin-based Tamilnad Mercantile Bank is a professionally managed lender and does not have an identifiable promoter.
Earlier this year, the managing director and CEO of the bank KV Rama Moorthy said that the bank will raise Rs 1,000 crore via IPO in the ongoing financial year.
75 percent of the net offer has been reserved for qualified institutional buyers (QIBs). 15% of the net offer is for allocation to Non-Institutional Investors (NIIs) and the remaining 10 percent shall be available for allocation to retail bidders.
According to the draft papers, Tamilnad Mercantile Bank will utilize the net proceeds from the fresh issue for augmenting its Tier–I capital base to meet its future capital requirements and to meet the expenses related to the offer.
Axis Capital, Motilal Oswal Investment Advisors, and SBI Capital Markets will be the Book Running Lead Managers. Link Intime has been appointed as the registrar.
As of March 31, 2019, 2020, and 2021, the deposits and advances in the state of Tamil Nadu contributed to 71.62%, 75.93%, and 76.33%, respectively, of the total business.
As of March 31, 2021, the bank said it had 4.18 million customers in Tamil Nadu comprising. It constitutes 85.07% of the overall customer base.
TMB had reported a 48% rise in net profit to Rs 603.3 crore for the financial year ended on March 31, 2021, as against Rs 407.69 crore in the year ended on March 31, 2020. Net interest income increased 16.52% to Rs 1,537.5 crore during the period.
The gross non-performing assets declined to 3.44% in FY21 from 3.62% percent in FY20. However, the net NPAs were up at 1.98% in March 2021 from 1.8% in March 2020.
At present, TMB has around 509 branches, of which 106 branches are in rural areas, whereas 247 in semi-urban, 80 in urban, and 76 are in metropolitan centers.
As of June 30, 2021, it had a customer base of around 4.93 million of which 70 percent comprised customers who were associated with the bank for more than five years.