List of The Companies Which Went Into The Merger/Acquisition Process In The Fiscal Year 2078/79; All Sectors Covered

In the fiscal year 2078/79, many company went into the merger or acquisition (M&A) process either due to the regulations set up by the government or to create a value viz to increase the wealth of their shareholders.

Mergers or acquisitions can enhance the company’s competitive position in the market and improve its financials significantly. Besides, M&A’s allow businesses to improve channel relationships, expand offerings of products and services, grow brand visibility, and increase capacity at a lower cost.

Here, we see the list of companies (sector wise) which has gone into the M&A process this fiscal year:

NOTE:

• The Last Trading Price (LTP) and Market capitalization is taken as of July 17, 2022 
• This data reflects all companies from each sector that conducted a merger or acquisition during the fiscal year 2078/79 (July 16–21 to July 16–22)
• The cells which are left blank are mostly due to the companies not being listed in the NEPSE.
• The given data shows the company which have already finalized the M&A Process as well as those companies that are in the process of being merged/acquired and have already signed Memorandum of Understanding (MoU) in the fiscal year 2078/79.

After being compelled to merge by the regulatory body, the Insurance Board (Beema Samiti), in order to raise their paid-up capital, many life insurance businesses decided to merge with each other.

The Fiscal Act 2078/79 also exempts the insurance firm from paying capital gains tax, dividend tax, and employee retirement tax if the preliminary merger agreement is completed by the end of the fiscal year. In order to take advantage of this, insurance companies executed a merger agreement before the deadline of the facility.

According to the rule that specifies life insurance companies must have a minimum paid-up capital of Rs. 5 Arba by the end of Chaitra 2079, nine out of the nineteen life insurance companies chose to merge in order to increase their paid-up capital in the fiscal year 2078/79, making the overall life-insurance companies come down to fourteen.

Non-life insurance companies have also been urged by the Insurance Board to raise the paid-up capital to Rs 2.5 Arba. Following the Insurance Board's judgment, the insurance companies have combined several strategies, including pursuing a merger, to meet that standard. There are a total of Twenty non-life insurance companies, after the merger of ten non-life insurance companies, the non-life insurance companies will come down to fifteen.

Worldwide, a sizable number of domestic and foreign banks engage in merger and acquisition activity. The goal of mergers and acquisitions in the banking industry is to take advantage of economies of scale. Banks can significantly increase their operations and significantly reduce their costs with the aid of mergers and acquisitions in the banking sector. This type of merger also has the critical benefit of reducing rivalry in the banking sector because it eliminates competitors from the market. Banks must mitigate risks and take advantage of opportunities that are readily available as shown by the current.

Out of the total 27 commercial banks in Nepal, Nabil Bank acquired Nepal Bangladesh Bank and likewise, and Himalayan Bank acquired Civil Bank. In the same vein, Nepal Investment Bank and Mega Bank merged and Global IME and Bank of Kathmandu merged with each other. The total number of commercial banks in Nepal is reduced to 23.

Nepal Rastra Bank had made the merger of microfinance companies with the cross-holding of banks and financial institutions compulsory.

If a commercial bank, development bank, or finance company owns more than 10% shares in various microfinance companies (case of cross-holding), they will have to submit an action plan for the merger between the microfinance companies. Issuing a directive on Monday, BFIs have been given time till Ashar end, 2079 to prepare the action plan of the merger.

Also, if BFIs have a shareholding of 51% or more on the microfinance company, the action plan for the merger between the companies or acquisition will have to be submitted.

This is also one of the reasons why so many micro-finance companies opted for the merger/acquisition process. In July end – of 2021, there were a total of 53 Microfinance companies in Nepal and during this one-year gap, 16 micro-finance companies went into the M&A Process. 

Following the merger of banks and financial institutions, hydropower companies did the same.
So, this fiscal year, the Electricity Regulatory Commission, which oversees hydropower companies, has given the go-ahead for the merger of four hydropower companies.

Between Ridi Hydropower Development Company and Rairang Hydropower Development Company, a merger agreement has already been inked. Additionally, this fiscal year's end saw the merger of the non-listed hydropower companies Makar Jitumaya Suri Hydropower Company Limited and Surikhola Hydropower Limited.

In the development banks, Garima Bikas Bank acquired Sahara Bikas Bank Limited in the fiscal year 2078/79.