Tamilnad Mercantile Bank files DRHP with Sebi for Rs 1,000 cr IPO

Hundred-year-old Tamilnad Mercantile Bank (TMB) has filed a draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (Sebi) for an Initial Public Offering (IPO).

In April this year, the bank’s Managing Director and Chief Executive Officer K V Rama Moorthy had said that the lender was planning a Rs 1,000 crore IPO this fiscal. According to the documents, the IPO will include an issue of 15.83 million fresh equity shares at a face value of Rs 10 each and an offer for sale of up to 12,505 shares by promoters and existing shareholders.

The bank said that the objective of the fresh issue is to meet its capital adequacy requirements. TMB had posted a 48 per cent rise in net profit at Rs 603.3 crore for the financial year ended March 2021 (FY21) as against Rs 407.69 crore in the year ended March 2020 (FY20). It posted a 16.52 per cent rise in net interest income at Rs 1,537.5 crore in FY21 from Rs 1,319.51 crore in FY20.

The gross non-performing assets declined to 3.44 per cent in March 2021 from 3.62 per cent in FY20. However, the net NPAs were up at 1.98 per cent in March 2021 from 1.8 per cent in March 2020.

At present, TMB has around 509 branches -- of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. As of June 30, 2021, it had a customer base of around 4.93 million of which 70 per cent comprised customers who were associated with the bank for more than five years. Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are appointed as book running lead managers for the IPO.