Three banks take the lion's share

Three merchant banks, NIDC Capital Markets Limited (NCML), NMB Bank limited and Ace Development Bank are neck and neck in business competition whereas the others are struggling hard. Out of 63 companies whose shares and debentures were issued last fiscal year, 18 chose NCML as their merchant bank, 17 went for NMB Bank and 13 settled with Ace Development Bank. This means the three occupied 76.19 percent business as a whole.

Citizen Investment Trust (CIT) received five clients, Nepal Finance (NEFINSCO) and Elite Capital four each, and Development Credit Bank and CIT/NCML one each. These three companies have ruled the roost during the past four months of the current fiscal year, too, with NMB getting business from six companies, NCML from five and the Ace from four. The Civil Capital got business from two companies and CIT from one.

Chief Executive Officer of NMB Upendra Poudel said that his bank pioneered shares applications through the internet and took other inventive measures that helped enhance its credibility and clients' trust. "We have been longer in the business, which has also helped us to win more clients," he added. Although there are 18 merchant bankers registered with the SEBON, only eight companies last year and four this year got business to manage the issuance of shares and debentures. Then, why are an increasing number of merchant banks coming up in the market? Niraj Giri, spokesman of Securities Board of Nepal (SEBON), said companies get attracted to this business as it opens many avenues, including issuance of shares, underwriting (guaranteeing to purchase share in case of non-subscription of shares), and portfolio management (making investment decisions using money other people have placed under his or her control) and registration of shares.

Besides 18 more companies already registered with the SEBON are awaiting final approval from the SEBON for merchant banking. They include Nabil Bank, Capital Investment and Development Company, National Investment and Capital Markets and Akash Investment. Financial institutions are attracted to this market as they want to reach wider market through mass marketing. "Many business opportunities have also been created in the capital market for the merchant bankers," Poudel added. Most of the jobs for the merchant banks have been related to rights share issuance, according to SEBON. Out of 18 companies receiving approval for issuing shares this year, 11 are for rights issues and the rest for ordinary shares. As many as 63 companies got approval to issue shares last year. Of these, 50 got approval to issue rights shares, 11 for ordinary shares and two for debentures.