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
