ICRA Nepal assigns IPO Grade 2+ to Standard Chartered’s FPO; highest public issue grading so far

ICRA Nepal has assigned “[ICRANP] IPO Grade 2+” rating to the upcoming FPO of Standard Chartered Bank Nepal Limited (SCB), indicating above-average fundamentals. This is the highest rating received by any public issue of Nepali companies so far. According to ICRA Nepal, the above average fundamental grading was factored in by the bank’s strong promoter profile, established track record and low cost of funds. ICRA Nepal has also taken into account the bank’s ability to maintain good asset quality despite of the stress in Nepalese economy due to the April 2015 earthquake and the subsequent border blockade. However, the grading was restricted to due to the decline in major profit indicators in the recent years. SCB’s credit growth of around 11% is lower than the industry average of 21% over the last 5 years, which further constrained the rating. However, increasing the paid-up capital to Rs 8 arba is expected to remain adequate to support SCB’s growth plans. 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. For the grading categories 2, 3 and 4, the sign of + (plus) appended to the grading symbols indicate their relative position within the grading categories concerned. Thus, the grading of 2+, 3+ and 4+ are one notch higher than 2, 3, and 4, respectively. Standard Chartered Bank PLC, United Kingdom holds 75% stake in Standard Chartered Bank Nepal Limited. After the issuance of 25.58 lakh FPO shares at Rs 1,290 per share, its promoter profile will reduce to around 70%. Securities Board of Nepal (SEBON) has approved the further public offering (FPO) of Standard Chartered Bank Nepal Limited at Rs 1,290 per unit (Rs 1,190 premium added to the par value of Rs 100).