Companies eye to float 50m units of shares

A total of 23 companies have sought approval from Securities Board of Nepal (SEBON) - the capital market regulator - to issue over 47.5 million units of rights and ordinary shares worth over Rs 4.75 billion to increase their capital base. According to SEBON, nine finance companies, eight development banks, five commercial banks and a company from others group have lodged application for issuing shares. As per existing provision, companies have to get approval from SEBON and Nepal Rastra Bank, the central bank, for the rights issue, bonus and ordinary shares after a proposal to this effect is endorsed by general assembly of the companies.

Under the finance group, Investa Finance, Valley Finance, Capital Merchant Banking and Finance, Shubhalaxmi Finance, Siddhartha Finance, Suryadarshan Finance, Zenith Finance, Merchant Finance and Yeti Finance have sought permissions for issuing shares. Of them, five have sought approval for rights issue, while four have lodged applications for ordinary shares issue.

Similarly, Muktinath Bikash Bank, Sewa Bikash Bank, Nilgiri Bikash Bank, Western Development Bank, City Development Bank, Paschimanchal Development Bank, Subhechha Bikash Bank and Triveni Bikash Bank have also approached SEBON for approval. Five of them have approached SEBON for ordinary issue, while remaining three have sought permission for rights issue.

Likewise, Agriculture Development Bank, Kumari Bank, NMB Bank Ltd and Citizens Bank International have also registered their applications for rights as well as ordinary issue, whereas City Homes Ltd of others group has approached SEBON for initial public offering (IPO). Meanwhile, SEBON has already granted permission to 21 companies for issuing shares as of mid-November. They will together issue over 48.80 million units of ordinary shares and rights shares worth Rs 4880.26 million.

Seven of the companies getting approval are finance companies, while nine are development banks, three insurance companies and two commercial banks. Similarly, seven development banks have got nod from the SEBON to issue ordinary shares.

Share prices mostly go up in the market in response to the announcement of rights and bonus shares. However, share prices in the Nepal Stock Exchange has gone down sharply following the announcements as number of investors did not increase to the extent of the number of shares that entered into the market.

"Limited number of brokers and confinement of their services only to the Capital and lack of institutional investment in the share market have badly affected the development of share market," SEBON Chairman Surbir Paudel told myrepublica.com on Wednesday. "Because of this fact, most of the small investors have suggested us to convert promoters share into ordinary shares by not more than two percent a year."

Source:

myrepublica.com