ICRA Nepal assigns Grade 4 to 50% right issue of Nerude Laghubitta Bikas Bank

ICRA Nepal, the credit rating agency, has assigned ‘Grade 4’ rating to the 50% right issue of Nerude Laghubitta Bikas Bank Limited, indicating below-average fundamentals. The right share in the ratio of 2:1 has already been approved by SEBON. According to a statement of ICRA Nepal, it has assigned ‘(ICRANP) IPO Grade 4’ to the right issue by taking into account NLBBL’s moderate track record. It has received funds from more than 10 class “A” commercial banks, has strong deposit base from its members and a good return on its net worth. The grading is, however, constrained in account of NLBBL’s concentration in Eastern Terai region, that faced a a six months political and economic turmoil last year and faces a stiff competition from other microfinance companies. The grading was also constrained by weak financial profiles of of its promoters, and regulatory uncertainty for microfinance companies. ICRA Nepal assigns IPO grading on a scale of IPO Grade 1 through IPO Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals. NLBBL will be issuing 900,000 units right shares at a face value of Rs 100 per unit. NCM Merchant Banking Limited has been appointed as the issue manager.