EPF‚ CIT express interest to purchase RBB's stake in NIBL

KATHMANDU:

Employees Provident Fund (EPF) and Citizen Investment Trust (CIT) have shown interest in acquiring around Rs three billion worth of promoter shares of Nepal Investment Bank Ltd (NIBL) that are under the possession of state-owned Rastriya Banijya Bank (RBB).

The interest was shown by the two state-owned contractual savings institutions at a time when RBB is attempting to offload 6.22 million units of promoter shares of NIBL to meet the regulatory requirement on crossholding of bank stocks.

“Yes, EPF and CIT are holding talks on acquiring RBB’s stake in NIBL. But they are yet to agree on the price,” Krishna Prasad Devkota, head of the Financial Sector Management Division at the Ministry of Finance, said.

Public shares of NIBL are currently being traded at Rs 940 per unit at the stock market, while promoter shares of the bank were last traded on January 13, 2013, at Rs 410 per unit.

RBB had originally set a minimum bidding price of Rs 594 for each promoter share. It had then revised the price downwards to Rs 525 per share. Now, sources close to the bank are saying that RBB is willing to offload each share at as little as Rs 482.

However, the two state-owned entities have said they would not pay more than Rs 445 per share.

EPF, for instance, has offered to purchase each share at a range of Rs 440 to Rs 445.

CIT, on the other hand, has said it would not extend more than Rs 443.01 per share. The investment trust had come up with the price based on average derived from calculations made from four different approaches, namely market price, earnings per share, book networth and dividend distribution.

“Since there is not much difference between the price demanded by RBB and prices offered by the two entities, we have asked all sides to sit and discuss the matter,” Devkota said.

If a deal is reached, EPF and CIT will each purchase half of RBB’s stake in NIBL.

RBB had first issued a public notice expressing its desire to offload NIBL shares on December 11. At that time it had fixed a minimum bidding price for every NIBL share at Rs 594 and had said the highest bidder would have to purchase all of NIBL shares up for grabs. But no one took part in the bidding. It then published the same public notice for second time. But again, there was no response from institutional

investors. RBB then allowed interested institutional investors to bid for at least 10 per cent of its shares in NIBL. But again no one showed interest.

“If we don’t find any alternative to sell these shares, we will ask individuals to bid for the promoter shares,” a bank source said.

RBB also owns 198,497 units of promoter shares of Nepal Housing Finance and is trying to offload them as well.

Source: THT