39.49 crore unit shares halted from transaction in NEPSE due to ongoing M&A; more shares to be frozen if big merger is strictly implemented

Mon, Jul 8, 2019 5:28 PM on Exclusive, Latest, Stock Market,

The number of share which has been frozen for trading in NEPSE has reached 39.49 crores since Nepal Rastra Bank (NRB) has taken a strict stand-point on merger and acquisition. The central bank is taking a stick approach to persuade banks to merge when the more subtle strategies didn't bring the desired result.

Many Bank and financial institutions (BFIs) have been in the merger and acquisition process since 25th Jestha 2074 and before. Some BFIs have completed the M & A process. However, 22 companies listed on NEPSE for trading are still in process.

NEPSE halts the trading of those companies based on Merger and acquisition by-laws 2073. The stock market is an information sensitive area and when the companies are undergoing M&A any information may cause drastic movements in the price of the shares. Therefore, this by-law was passed to eliminate such occasions.

The table below gives the list of companies whose trading has been halted due to Merger and Acquisition.

Last Day of Trading Company Name Listed Shares (Units) Par value Paid-up Capital(Rs) Closing Price Market capitalization(RS)
7/7/2019 Sahayogi Vikas Bank (SBBLJ) 50,97,682 100 50,97,68,200 197 1,00,42,43,354
7/4/2019 Global IME Bank (GBIME) 10,31,05,159 100 10,31,05,15,900 295 30,41,60,21,905
7/4/2019 Janata Bank (JBNL) 8,00,08,858 100 8,00,08,85,800 214 17,12,18,95,612
7/4/2019 Suryodaya Laghubitta (SLBS) 10,79,190 100 10,79,19,000 793 85,57,97,670
7/4/2019 Kailash Dev. Bank (KBBL) 2,52,06,000 100 2,52,06,00,000 238 5,99,90,28,000
6/6/2019 Lalitpur Finance (LFL) 23,69,000 100 23,69,00,000 126 29,84,94,000
6/4/2019 Kankai Bikas Bank KNBL) 50,00,000 100 50,00,00,000 196 98,00,00,000
6/4/2019 Aarambha Microfinance (AMFI) 6,00,000 100 6,00,00,000 529 31,74,00,000
6/6/2019 Chautari Laghubitta (CHLBS) 18,60,000 100 18,60,00,000 464 86,30,40,000
5/21/2019 Nepal Community Dev. (NCDB) 53,16,580 100 53,16,58,000 145 77,09,04,100
5/19/2019 Kalika Laghubitta (KMCDB) 10,80,000 100 10,80,00,000 699 75,49,20,000
5/13/2019 Mirmire Laghubitta (MMFDB) 13,11,994 100 13,11,99,400 899 1,17,94,82,606
5/13/2019 Nagbeli Laghubitta (NBBL) 16,76,795 100 16,76,79,500 588 98,59,55,460
5/13/2019 Kisan Microfinance (KMFL) 8,97,970 100 8,97,97,000 830 74,53,15,100
5/16/2019 NMB Bank (NMB) 9,61,81,630 100 9,61,81,63,000 382 36,74,13,82,660
8/19/2018 Om Dev. Bank (ODBL) 2,51,52,000 100 2,51,52,00,000 197 4,95,4944,000
5/14/2019 Bhargav Bikas Bank (BHBL) 50,16,002 100 50,16,00,200 199 99,81,84,398
3/7/2019 Womi Laghubitta (WOMI) 10,10,880 100 10,10,88,000 1128 1,14,02,72,640
3/7/2019 Jebil's Finance (JEFL) 80,90,776 100 80,90,77,600 146 1,18,12,53,296
3/10/2019 Purnima Bikas Bank (PURBL) 52,50,000 100 52,50,00,000 188 98,70,00,000
7/10/2018 Western Dev. Bank (WDBL) 50,41,000 100 50,41,00,000 231 1,16,44,71,000
6/8/2017 Sahara Bikas Bank (SHBL) 7,30,000 100 7,30,00,000 460 33,58,00,000
3/14/2019 Hathway Finance (HATH) 30,00,000 100 30,00,00,000 116 34,80,00,000
1/17/2019 Saptakoshi Dev Bank (SKDBL) 52,37,650 100 52,37,65,000 122 63,89,93,300
3/17/2019 Tinau Dev Bank (TNBL) 56,77,670 100 56,77,67,000 166 94,24,93,220
Total number of shares   39,49,96,836 Market capitalization     1,11,72,52,92,321
            1.11 Kharba

On the basis of last traded price (LTP) of respective BFIs, the market capitalization amount stands at Rs 1.11 Kharba. This amount is equivalent to 7.15 percent of total market capitalization which stands at Rs. 15.52 kharba as on 23rd Ashadh 2076. NMB Bank (NMB) has the largest market capitalization of Rs 36 arba and its trade has been halted since Jestha 02, 2076.

Similarly, after the instruction of NRB, Global IME Bank and Janata Bank have signed preliminary agreement for merger, which has decreased the market capitalization by Rs 47.5 arba.

According to NRB, the big merger process will be promoted strictly and therefore more companies are likely to go for M & A, resulting in more shares being frozen from transaction on NEPSE. The longer the time taken for M & A process, the longer will the trading of these shares will be halted in NEPSE.