Global IME plans FPO through share auction in a month’s time

ShareSansar, July 7:

Global IME Bank Limited is likely to issue its Follow on Public Offer (FPO) of 3,52,140 unit shares through auction in a month’s time.

According to sources at the commercial bank they have applied with the Securities Board of Nepal (SEBON) some two week back to make the FPO through a share auction since its size is quite small.

“We expect the regulator to approve the FPO within the next two weeks,” said the bank officer. “Once we get the approval, we will float the FPO in next 15 to 20 days.”

SEBON spokesperson Niraj Giri said that their legal department is currently discussing whether to allow Global IME Bank to issue the FPO through share auction or at a premium rate by issuing an offer letter.

“Since the size of the FPO is less than 1 percent of the capital base of Global IME Bank, it may be wise to float the FPO through share auction,” he added. “But the legal department will make the final decision to this effect.”

Asked if what is the provision to set the premium price of FPO or the minimum price to be quoted for the share auction, the SEBON officer clarified that the regulations authorized the Board of Directors of the company concerned to set the price.

“The market will, nevertheless, regulate the price. The company stands at lose if it floats the IPO higher or lower than the prevailing price of its scrip in the market,” he added.  

Special General Meeting of the commercial bank held in Birgunj on June 2 had endorsed a proposal to this effect as part of the plan to ensure 30 percent of its stake to ordinary shareholders to maintain 70:30 ratio of public-ordinary share structure.
 
Global IME source further said that they want to float the FPO through a share auction also because issuing it like a public issue will be much lengthy process as the premium rate for the FPO has to be approved by a special general meeting.

Global IME is issuing the FPO as per a directive issued by the central bank.

So far the ordinary shareholders’ stake in the commercial bank is limited to 29.40 percent.

Global IME’s share trading had resume from April 30 following its merger with Commerz and Trust Bank Nepal Limited.

The merger of the two commercial bank which was endorsed by both the banks’ Annual General Meeting in March makes Global IME one of the leading banks with the largest network of branches and ATMs in the private sector.

Global IME started the integrated business from April 9.