Why SAT cleared TMB initial public offering
PremiumThe quota for retail investors was subscribed 1.53 times, qualified institutional buyers subscribed 73% of their share, and non-institutional investors bid for 58%.
MUMBAI : The initial public offering (IPO) of Tamilnad Mercantile Bank was subscribed 83% on the first day on Monday, receiving bids for 72,56,228 shares against the 87,12,000 shares on offer after going through a series of legal challenges in courts, with the regulator and tribunals.
The quota for retail investors was subscribed 1.53 times, qualified institutional buyers subscribed 73% of their share, and non-institutional investors bid for 58%.
On 2 September, the Securities Appellate Tribunal (SAT) dismissed appeals by minority shareholders for a stay on the IPO. In the order, made public on Thursday, SAT dismissed the pleas by the bank’s investors on three grounds. One, no appeal was made to allow the shareholders to tender their shares. Two, exemption from filing a fresh draft red herring prospectus does not infringe on the legal rights of shareholders. Three, the IPO process is disclosure-based and all adequate disclosures were made.
Six overseas investors, Robert and Ardis James Co., East River Holdings, Swiss Re Investors (Mauritius), Kamehameha Mauritius, Cuna Group (Mauritius), and FI Investment, had urged SAT to stay the IPO. They objected to the move to withdraw the offer for sale (OFS) from the public issue.
In January, the shareholders filed separate writ petitions before a division bench of Bombay High court seeking an order directing the Securities and Exchange Board of India (Sebi) to accept the DRHP only after permitting the petitioners to participate in and tender shares on a proportionate basis.
SAT in its order said that no such appeal was made before it and made it a ground to dismiss the appeal. It also said shareholders had the right to appeal against Sebi’s decisions only if ‘aggrieved’ by the order.
The six shareholders wanted to participate in the OFS, but it was withdrawn on 11 May by the bank’s board. Subsequently, Tamilnad bank approached Sebi seeking exemption from filing a fresh draft prospectus, which was allowed by the market regulator in a 12 May order.
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“In our view the appellants cannot be aggrieved by granting of exemption by Sebi. No legal right of the appellant has been infringed," SAT said.
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