KATHMANDU, December 27:
The primary market will be seeing one of the large public issues worth Rs 920 million within the next one month.
The capital market regulator — Securities Board of Nepal (Sebon) — has approved the Initial Public Offering (IPO) of Century Commercial Bank. This offering, worth Rs 920 million, will be the last IPO of a commercial bank as Nepal Rastra Bank has stopped providing licence to commercial banks since the past three years.
“The prospectus of the bank’s IPO got approved today,” informed an official at Sebon. “The bank had filed the prospectus for approval in June but it required a few amendments so it took a
little longer to get approval,” informed the official.
The bank had appointed Citizen Investment Trust, Nabil Investment, Growmore Merchant, Civil Capital and NIDC Capital Market Ltd as sales and issue managers for IPO back in May. The bank is expected to float the shares to the public in the first week of January 2014.
Century Commercial Bank’s IPO is going to be the second largest IPO among all the banks and the largest among private banks. In 2010, Agriculture Development Bank had offered shares worth Rs 960 million.
Following the IPO, the bank that has a paid up capital of Rs 1.08 billion, will have capital of Rs two billion, as per the regulatory requirement.
Icra Nepal — Nepal’s only credit rating agency — has assigned an ‘[ICRANP] IPO Grade 4+’ to the bank’s IPO. The rating indicates below-average fundamentals to the IPO. According to Icra Nepal, grading has been constrained by the bank’s limited track record, lack of diversity in earnings, low seasoning of credit book and inferior deposit profile compared to the banking industry systemic average.
Likewise, low profitability, competition from other commercial banks, and uncertain operating environment that banks in Nepal are currently facing also hurt the bank’s rating. However, lower exposure to real estate sector compared to systemic average and comfortable assets quality indicators helped the bank’s rating, according to Icra Nepal.
After listing, the bank will be the 32nd commercial bank at Nepal Stock Exchange.
Last fiscal year, the Nepali primary market had witnessed IPOs of three commercial banks — Civil Bank, Commerz and Trust Bank Nepal and Mega Bank — worth Rs 2.1 billion. Civil Bank’s offering was oversubscribed by seven times, Commerz and Trust Bank’s IPO was oversubscribed by 11 times, while Mega Bank’s offering got oversubscribed by 22 times the size of the offering.
Century posted Rs 35 million operating profit in the first three months of current fiscal year.
Source:THT
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