ICRA Nepal gives ‘below-average fundamental’ rating to IPO of Rapti Bheri Bikas Bank

ShareSansar, October 28:

ICRA Nepal, the credit rating agency, has given ‘Grade 4’ rating to the proposed Initial Public Offering (IPO) of Rapti Bheri Bikas Bank (RBBL), indicating the development bank’s IPO of below-average fundamentals.

According to a statement of ICRA Nepal, it has assigned ‘(ICRANP) IPO Grade 4’ to the IPO of Rapti Bheri which means that the offering holds below-average fundamentals.

“The grading is constrained by RBBL’s limited track record, small scale of operations, limited franchise, weak competitive positioning resulted from high cost of funds, low profitability, lack of diversity in earnings, inadequate internal control mechanism, limited banking experience of top management team, lack of integrated system among the branches and geographical concentration risk,” reads the statement of the ICRA.

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.

RBBL is planning to float IPO of 500,054 units at the face value Rs 100.

RBBL has started its operations in February 2010 as a 3-district-development bank with license to operate in Nepalgunj, Dang and Bardiya Districts of Nepal.