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Siva to offload TMB equity to Nadars, stake for ICICI likely

Our Correspondent in Madras

The battle for the control of Tamilnad Mercantile Bank is likely to peter to a deal between Sivasankaran of the Sterling group and the Nadars.

The imminent deal will see Sivasankaran offloading his 67.3 per cent equity (191, 400 shares) to an investment arm of the Nadars for anywhere between Rs 1.50 billion and Rs 2 billion.

Sivasankaran is expected to use the funds generated from the TMB deal to part-finance his telecom ventures.

The Sterling group had recently bought out Swisscom's stake in Essar Cellphone. Sivasankaran is also seeking to buy out Swisscom's 32.51 per cent stake in Sterling Cellular and ten per cent stake in Aircel Digilink. The telecom deals are expected to cost Rs 2.62 billion.

Sivasankaran had bought the TMB equity from the Essar group. The deal was part of a package involving cellular licence.

The Nadars' forum is expected to pay Rs 200 million as advance and the rest in six months.

The first part of the deal is expected bring the irrevocable power of attorney and voting rights back to the Nadars. They will reciprocate by withdrawing cases filed against the Sterling chief.

Media reports indicated that TMB shares are worth Rs 12,000 each, as per a study done by financial institution the ICICI. However, due to the controversy-marked record of TMB, the Nadars may offer the FI part of the shares bought back from Sivasankaran at a lower price. FIs' presence in TMB is considered crucial as they are expected to give a cutting edge to financial management of the bank.

The rest of the stake will be distributed widely across the Nadar community in such a way that no individual owns more than 25 shares.

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