Tamilnad Mercantile Bank’s gray market premium drops 86% ahead of IPO

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Tamilnad Mercantile Bank IPO listing price: Dealers claim Tamilnad Mercantile Bank commands a premium of Rs 5 in the gray market, an unofficial market for unlisted securities.

Tamilnad Mercantile Bank is set to debut in the secondary market this week. The IPO of TMB – one of the oldest private sector banks in the country – worth Rs 832 crore closed last week with an overall subscription of almost threefold with demand modest across all investor categories.

Dealers say Tamilnad Mercantile ended up with a premium of Rs 5 in the gray market on Sunday from Rs 35 in the IPO, days before listing on the BSE and NSE. The gray market is an unofficial market for unlisted securities.

“We could see an interest-free listing and the issue could be listed at par with only a marginal premium,” said Abhay Doshi, co-founder of Unlisted Arena, a portal that tracks gray markets and trades in unlisted securities. . CNBCTV18.com.

Date Gray market premium (in rupees)
September 9 5
September 8 5
September 7 15
September 6 15
September 5 35
September 2 35
(Source: IPO Watch)

“Amid recent decent primary market listings, Tamilnad Mercantile Bank has received a slow response, particularly from qualified institutional buyers and high net worth individual segments. Some outstanding legal issues and pricing may have made investors vigilant,” he said.

Tamilnad Mercantile Bank’s IPO – which was open for subscription from September 5-7 – saw bids for a total of 2.5 crore shares against the 87.1 lakh of shares on offer, marking an overall subscription of 2.9x, according to exchange data.

The shares under the IPO were available for auction in a price range of Rs 500-525 in multiples of 28. This made a batch of Tamilnad Mercantile Bank shares worth Rs 14,000-14,700 for auction.

Tamilnad Mercantile Bank shares will begin trading on September 15.

Ahead of the IPO, Tamilnad Mercantile Bank raised Rs 363.5 crores from anchor investors including Nomura, Societe Generale, Max Life Insurance, Kotak Mahindra Life Insurance and Bajaj Allianz Life, allocating 71.3 lakh of shares at Rs 510 each.

Tamilnad Mercantile Bank is the third initial share sale to hit Dalal Street in the space of three weeks, after a lull of nearly three months.

Last month, the IPOs of Syrma SGS Technology and DreamFolks Services concluded with strong investor response. Syrma’s shares made a strong debut in the secondary market, ending the trading day at a premium of around 42% to the issue price.

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