NB Insurance receives ICRA Grade 4 for upcoming 100% right issue

ICRA Nepal has assigned an “[ICRANP] IPO Grade 4”, indicating below average fundamentals to the proposed rights issue amounting Rs 27 crore to NB Insurance Company Limited (NBIL). The process to issue 100% right share of NBIL is on review in Securities Board of Nepal (SEBON) pipeline. The insurance company is proposing to issue 2,700,000 shares in the ratio 1:1 (100%) at the face value of Rs 100 each to be issued to the existing shareholders at par. As per ICRA Nepal, the grading remains constrained by the low possibility of equity holders receiving dividend payments in the medium term (2-3 years) due to the weak financial profile (sizeable accumulated losses of around Rs 15.3 crore as on mid-October 2016) and weak solvency indicators (mainly due to erosion in net worth over the years) of the company. Although the proposed equity injection will strengthen the capital base to some extent, the company is likely to require further capital injection and/or internal accruals to improve its capitalization levels. Global IME Capital Limited has been assigned as the issue manager for the right issue. NB Insurance has earned net profit of Rs 3.12 crore in the second quarter of the fiscal year 2073/74.  Its paid up capital stand at Rs 27 crore and after issuance of 100% right share, its paid up capital will increase to Rs 54 crore.