In the stock market, the laws of demand and supply are one of the major forces that make the share prices fluctuate and keeps the market moving. A perfect example of how these forces work can be seen in the microfinance sector. The companies listed under this sector usually offer very small number of share to the general public compared to other sectors. Now, limited number of shares results in limited supply and higher dividend per share. The expectation of higher dividend drives investors to hold these shares and hence the demand shoots up. This in turn makes the share prices of microfinance companies’ increase. To keep the investors interested, these companies have to constantly come out with satisfactory dividends and rights for the shareholders. The expectation of dividend and rights adds to the demand and results in increase in the prices of the shares.
Recently, the stock market saw a wave of rights distributed by microfinance companies which is still continuing and is expected to go on for another couple of months. While, some microfinance companies have already distributed rights, some have endorsed it in their AGMs, some have applied for approval from SEBON and are under preliminary review. However, there are some microfinance companies who have no plans of issuing right shares for the shareholders. For the purpose of ease and clarity, a list has been compiled containing all the information regarding the rights proposed and distributed by microfinance companies.
The following companies have already issued rights to the shareholders. In the year 2018/19, a total of 1.22 Crore units have been issued as rights by microfinance companies. First Microfinance (FMDBL) offered the highest number of shares at 22.81 Lakh units while Womi Microfinance (WOMI) offered the lowed at 2.33 Lakh units. The sector has seen an inflow of capital worth Rs.1.22 Arba through right shares issue.
Out of 16 microfinance companies who had endorsed right shares in their recent AGMs, only 2 companies i.e. Mero Microfinance (MERO) and Unnati Microfinance (UMB) have received approval from SEBON for the issue of right share. Rest of the fourteen companies have only endorsed it in their AGM but have not applied for approval from SEBON. Apart from these companies, Mithila Laghubitta (MLBBL) is distributing 50% right share or 3.29 Lakh units and the issue is currently open.
In a couple of days, MERO and UMB right shares totaling to 34.65 Lakh units will be available for the respective shareholders. While the rights from rest of the above mentioned companies can be expected in a few months of time. These rights total to 1.66 Crore units. A total investment of more than Rs.2.01 Arba is awaited to flow into this sector through the means of right share issue.
Right shares of microfinance companies are an opportunity for the existing shareholders to hold more share of more value with relatively less investment. Even after considering the adjustment aspect upon issue of rights, the investor will still be in overall gain post investment in rights. Right shares of microfinance companies can influence the market in a positive way and a thoughtful and wise investor would never miss to capitalize this opportunity.
In a nutshell, the following table is the overall look on the rights proposed by microfinance companies and their current status.