Know how Prabhu Bank is one of the best buy at the current market scenario; shareholders to get 21.45% extra share

ShareSansar July 13:

Prabhu Bank Limited (PRVU) acquiring Grand Bank Limited (GRAND) is the first ever acquisition of a commercial bank by another in Nepal.

Special General Meeting (SGM) of Prabhu Bank Limited (PRVU) going to be held on 7th Shrawan, 2072 will be approving its acquisition of Grand Bank Limited.

The meeting will also be endorsing the swap ratio fixed by the Due Diligence Audit (DDA) of Prabhu and Grand Bank which stands at 121.45: 65.58 respectively.  After the acquisition the paid up capital of Prabhu Bank will reach to Rs 5.92 arba from 3.208 arba at present.

At present Prabhu has a paid up capital of Rs 3.20 arba. So, how will the paid up capital of Prabhu reach 5.92 arba as mentioned in the recently published SGM  notice of the bank?

 

The 12th and 13th Annual General Meeting of Prabhu Bank held on Chaitra 13, 2071 had already endorsed 10:2 ratio i.e. 20% right shares to its shareholders. After the adjustment of right shares the paid up capital will reach to Rs 385 crores and six lakhs and sixty two thousands from Rs 320 crores and eighty eight lakhs and eighty five thousands at present.

As per the Company secretary of Prabhu Bank, Mr Amit Bhandari, “The right issue has already got ICRA rating and most likely will be issued in the month of Shrawan or Bhadra.” The company is seeking the final approval from SEBON, upon getting it approved will publish a book closure date for the same, he added.

Grand Bank has a Paid up capital of Rs 2 arba and as per the swap ratio fixed by the DDA Prabhu Bank’s 121.45 share is equals to 65.58 share of Grand Bank. Prabhu Bank has done over valuation of its share after which 2 arba paid up capital of Grand Bank will be added to the Prabhu Bank. The paid up capital after the acquisition will be Rs 5.85 crore. The bank has yet to get it approved from its upcoming SGM and then from the NRB in this regard.

Upon the NRB endorsement, the shareholders holding 100 units of Prabhu Bank shares will get 21.45 shares in premium, and the shareholders holding 100 units of Grand Bank will get 65.58 shares of Prabhu Bank, for that the separate book closure date will be published and accordingly integrated operation of both the banks will commence from the month of Bhadra, said Bhandari.

Prabhu Bank is also acquiring ailing Nepal Development Bank Limited at Rs 30 per share value. The paid up capital of the development bank stands Rs 32 crores. That ways, the total paid up capital of Prabhu Bank will add up to Rs 9.6 crores after the acquisition of the development bank. Under the acquisition, agreement six (6) shares of Nepal Development Bank would be equivalent to one (1) share of Prabhu. In order to get the shares, shareholders of Nepal Development Bank will have to meet the fit and proper test standard. Promoters who do not meet the standard and shareholders who want cash instead of shares will get Rs 30 per share.

Now the depositors of Nepal Development Bank can withdraw the money from Prabhu Bank Limited and the loans floated by the development bank will now be recovered by Prabhu Bank.

In order to buy out Nepal Development Bank, Prabhu had signed an agreement with a liquidator on Magh 11, 2071. Nepal Rastra Bank had given its nod to the acquisition deal on Falgun 6. The final deal was long overdue as the process was delayed pending court verdict on some outstanding issues. Appellate Court Patan issued a verdict on the matter on Falgun 25, paving the way for the acquisition.

This is how the paid up capital of Prabhu Bank shall increase from the existing Rs 3.20 arba to Rs 5.92 arba in the near future.

Prabhu Bank has posted a net profit of Rs 69.44 crore in third quarter of the current fiscal year. The company reserve figure stands Rs 25 crore plus during the same period. There is a decent chance that the bank may pay out dividend this time to its shareholders from the profit of this fiscal year. However, any dividend will be claimed only on Rs 3.20 arba paid up capital. Since, both the acquisitions and right share issuance will be formalize only in next fiscal year i.e. 2072/73.

The last traded price of Prabhu Bank (PRVU) stood Rs 331 per share as per yesterday’s closing at NEPSE.

Prabhu has an aggressive history of merger and acquisition
 
With the increase in the number of Nepalese national going abroad for employment, the scope of remittance business in the country has grown in recent years. To serve this market, Prabhu Money Transfer Pvt. Ltd. was established in the year 2002. In a short span of time the Prabhu Money Transfer P. Ltd (Prabhu) has been able to capture a good market share and is now one of the leading money transfers from Gulf, Malaysia and North America.

The category ´C´ financial institution, Prabhu Finance Limited which has a net worth of Rs 676.77 million, on Asad 30, 2070 had formally tied up with Dhading-based Samabriddhi Development Bank and Kathmandu-based Baibhava Finance Limited to upgrade itself to Prabhu Bikas Bank Limited. Later, on 30th Bhadra, 2071 Prabhu Bikas Bank elevated to the status of commercial bank after merging with Kist Bank Limited, Gaurishankar Development Bank Limited and Zenith Finance Limited.  

Now, the bank is in process of acquiring ‘A’ class financial institution Grand Bank Limited and endorse it soon from its upcoming Special General Meeting (SGM) going to be held on 7th Shrawan, 2072. Also, Prabhu is in last phase of acquisition of an ailing Nepal Development Bank  

Prabhu has the highest network of ATM in the country, will have the maximum branches and highest paid up capital among all the BFI’s of Nepal (excluding state owned commercial banks).