Shares of Tamilnad Mercantile Bank Ltd. declined on listing after its initial public offering was subscribed 2.86 times.
The stock of the hundred-year-old lender listed at Rs 510 apiece on the BSE, a discount of 2.85% to its IPO price of Rs 525 apiece. The shares fell as much as 3.2% over its IPO price to trade at Rs 508 as of 10:04 am.
The shares gained about 1% from the listing price to Rs 515 as of 12:02 p.m. That's a 1.9% discount over the IPO price.
The Rs 832-crore IPO, which opened for subscription on Sept.5, was subscribed 0.83 times on its first day, and was fully subscribed on the second day. On the final day, it was subscribed 2.86 times, led by demand from retail investors.
Tamilnad Mercantile Bank, in its initial share sale, issued fresh stock of 1.58 crore equity shares, constituting 10% of the post-offer paid-up equity share capital of the bank, according to its red herring prospectus.
The lender has traversed through numerous regulatory woes over recent years.
On Sept. 2, the Securities Appellate Tribunal dismissed a plea filed by six of the lender's shareholders objecting to its decision to remove the offer for sale component from the IPO.
Six of the lender's shareholders—Robert and Ardis James Co., East River Holdings, Swiss Re Investors (Mauritius), Kamehameha Mauritius, Cuna Group (Mauritius), and FI Investments—had approached the SAT with a plea to injunct the IPO.
Tamilnad Mercantile Bank said it would direct the net proceeds from the IPO towards augmenting the bank's tier-1 capital base in order to meet its future capital needs. The growth in the lender's assets, majorly loans and advances and investment portfolio will drive its capital expenditure.
The bank, considering its Tier-I position, has no plans to augment the Tier-II capital in the near future.
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