KATHMANDU, APR 04, 2013
The primary market is gearing up for more than 15 initial public offerings (IPOs), while investors are eager for bigger IPOs but giving a cold shoulder to small offerings of regional development banks and finance companies.
More than 15 companies are seeking approval for the primary offering of ordinary shares worth more than Rs 1.16 billion at the capital market regulator — Securities Board of Nepal (Sebon).
The capital market will see the public offering of Mega Bank, Sanima Mai Hydropower, Sana Kisan Bikas Bank and Rural Microfinance Development Center (RMDC) before the end of the fiscal year.
“Investors are keen on shares of commercial banks and hydropower companies due to the assurance of better returns,” said president of Nepal Investors’ Forum Sitaram Thapaliya.
Recent IPOs of two commercial banks — Civil Bank, and Commerz and Trust Bank — were well received by the public. Civil Bank’s IPO was oversubscribed by more than seven times, while Commerz and Trust Bank’s IPO was also oversubscribed by 11 times. Likewise, the Nabil Bank sponsored mutual fund scheme also got subscribed by four times.
On the other hand, IPOs of regional development banks and finance companies are not subscribed even within one month of the opening date. Last year, Bhargab Bikas Bank’s promoters and underwriters had to pitch in due to the lukewarm participation of investors. Likewise, the underwriter of Lotus Investment Finance — Civil Capital — refused to buy the shares that were unsubscribed. Sebon might allow the underwriter to get away with not fulfilling its obligations and annul the IPO.
Recently, Jebil’s Finance postponed the closing of its IPO of 980,000 unit shares. The finance company had opened its public offering on March 15 but, due to under-subscription, investors can buy the shares until April 18.
“Investors are not confident about the future of smaller development banks and finance companies so they are not interested in purchasing their shares, irrespective of the possibility of good returns,” pointed out Thapaliya.
Earlier, during the peak at the capital market, investors were jumping into the primary market irrespective of the companies and prospects.
“Moreover, a few class ‘B’ and ‘C’ financial institutions have been liquidated and half a dozen are facing prompt corrective action from the regulator, which is not helping attract investors to the primary market,” he added.
Though class ‘B’ and ‘C’ financial institutions are faring well in the primary market, investors are into microfinance development banks — class ‘D’ entities. The recent public issue of Swarojgar Laghubitta Bikas Bank worth Rs 47 million was oversubscribed by almost 10 times.
Microfinance development banks are one of the best dividend payers in the stock market and their share price has also been appreciating.
Source: THT
The primary market is gearing up for more than 15 initial public offerings (IPOs), while investors are eager for bigger IPOs but giving a cold shoulder to small offerings of regional development banks and finance companies.
More than 15 companies are seeking approval for the primary offering of ordinary shares worth more than Rs 1.16 billion at the capital market regulator — Securities Board of Nepal (Sebon).
The capital market will see the public offering of Mega Bank, Sanima Mai Hydropower, Sana Kisan Bikas Bank and Rural Microfinance Development Center (RMDC) before the end of the fiscal year.
“Investors are keen on shares of commercial banks and hydropower companies due to the assurance of better returns,” said president of Nepal Investors’ Forum Sitaram Thapaliya.
Recent IPOs of two commercial banks — Civil Bank, and Commerz and Trust Bank — were well received by the public. Civil Bank’s IPO was oversubscribed by more than seven times, while Commerz and Trust Bank’s IPO was also oversubscribed by 11 times. Likewise, the Nabil Bank sponsored mutual fund scheme also got subscribed by four times.
On the other hand, IPOs of regional development banks and finance companies are not subscribed even within one month of the opening date. Last year, Bhargab Bikas Bank’s promoters and underwriters had to pitch in due to the lukewarm participation of investors. Likewise, the underwriter of Lotus Investment Finance — Civil Capital — refused to buy the shares that were unsubscribed. Sebon might allow the underwriter to get away with not fulfilling its obligations and annul the IPO.
Recently, Jebil’s Finance postponed the closing of its IPO of 980,000 unit shares. The finance company had opened its public offering on March 15 but, due to under-subscription, investors can buy the shares until April 18.
“Investors are not confident about the future of smaller development banks and finance companies so they are not interested in purchasing their shares, irrespective of the possibility of good returns,” pointed out Thapaliya.
Earlier, during the peak at the capital market, investors were jumping into the primary market irrespective of the companies and prospects.
“Moreover, a few class ‘B’ and ‘C’ financial institutions have been liquidated and half a dozen are facing prompt corrective action from the regulator, which is not helping attract investors to the primary market,” he added.
Though class ‘B’ and ‘C’ financial institutions are faring well in the primary market, investors are into microfinance development banks — class ‘D’ entities. The recent public issue of Swarojgar Laghubitta Bikas Bank worth Rs 47 million was oversubscribed by almost 10 times.
Microfinance development banks are one of the best dividend payers in the stock market and their share price has also been appreciating.
Source: THT
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