How much to invest in FPO of Nepal Investment Bank?

Nepal Investment Bank Limited (NIB) will be issuing 90 lakhs, 69 thousand, 3 hundred and 88 unit shares as a part of Further Public Offering (FPO) from Falgun 11, 2072. The FPO will be issued at Rs. 601/unit.

Interested investors must apply a minimum of 10 units while one can apply up to 2 lakhs units. The issue is set to close on Falgun 14 at the earliest.

How much to Invest in NIB FPO?

Investors applying Rs. 50,000 or below per application form are classified as small investors. Security Allotment Guideline 2068, states that at least 40% of the securities being offered in IPO/ FPO must be allotted to the small investors. However, if the total amount from the small investors exceeds the 40% of the total collected amount then this rule does not apply.

In almost all the cases in Nepal, the total amount from the small investors does not exceed the 40% of total collected amount and as a result small investors are allotted more shares than big investors.

So, if you have limited cash on hand, it would wise to invest fifty thousand or less per application form.

Let’s look at the allotment model of FPO of Shikhar Insurance where investors who had applied from Rs. 6,500 or 10 units to Rs .19, 500 or 30 units shares on Small investors category and from Rs. 52,000 or 80 units to Rs. 1, 17,000 or 180 units on Other/ Big investors category was decided through lottery and remaining investors who had applied for Rs 26,000 or 40 units to Rs. 45,500 or 70 units were allotted 32.5 % to 31.42 % on pro-rata basis. And the other investors applied for Rs. 1,23,500 or 190 units to Rs. 6,50,00,000 or 1,00,000 units were allotted 5.26 % to 4.90 % on pro rata basis.

In case of NIB FPO, it would be wise to apply maximum of 80 units (Rs 48080.00) per applicant for investors with limited cash on hand.

As the number of units applied must be multiple of 10, investors applying 90 or more units per application form would have to invest more than fifty thousand i.e. making them big investors. If we look at the history of FPO and IPO in Nepal, return to small investors has been higher than compared to the big investors.

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NIBL FPO worth Rs 5.45 arba, 90.69 lakh units,from Falgun 11 at Rs 601/unit; Reserve to double after FPO

Please Click here for Offer Letter of the FPO