Janata Bank to go public by April end

KATHMANDU, APR 16:

The primary market will see the primary issue of a commercial bank after a gap of two years.

Janata Bank — the 27th commercial bank in the country — will be issuing its 60 million units of ordinary shares worth Rs 600 million — the largest Initial Public Offering (IPO) among private commercial banks — at a face value of Rs 100 per unit to the public by the end of April. “The capital market regulator has already granted the bank approval for the primary issue,” said chief executive of the bank Bijay Pant.

Citizen Investment Trust (CIT), NMB Capital and Civil Capital have been appointed as the underwriter and issue manager of the primary issue. “It is the largest public offering by a private commercial bank in the country,” he added.

The largest public offering in the domestic market was undertaken by Nepal Telecom that issued 15 million shares worth Rs 9 billion in January 2008.

Agriculture Development Bank (ADBL) had floated its primary issue worth Rs 960 million that was oversubscribed by 150 times in just three days of the opening of the issue in April 2010.

Pant is also confident that the public issue will be oversubscribed as Janata Bank has robust financial health. “The third quarter result of the bank will reveal the bank’s financial status which will help the public take an informed decision,” he said, adding that the bank — that has 23 branches — has registered an operating profit of around Rs 90 million in the third quarter of the current fiscal year. “It has a deposit base of around Rs 6.8 billion and has lent Rs 6.5 billion, whereas it has Rs 135 million in reserves and surplus,” he said.

“Apart from the bank’s financial status, there is still no risk in the primary market,” the chief executive said, “Those, who have burnt their fingers in the secondary market might be hesitant but due to the positive trend in the market in the last week, investors have been encouraged.”

Since ADBL’s IPO, there has not been any issue of blue chip stocks except for Chilime Hydropower that was well received by the general public.

The underwriters and the bank are hopeful that the issue will get a warm response as investors are still keen on acquiring shares of commercial banks at face value.

Currently, there are 25 listed commercial banks as Nepal Bank has been delisted from the stock market.

There are four more commercial banks who will be floating their primary issues in the next six months as according to Nepal Rastra Bank’s regulation, licensed banks and financial institutions need to issue ordinary shares allotted for the general public within two years of coming into operation.

Source: THT