NIBL to raise Rs 5.45 arba from FPO; Reserve & Net worth per share to increase by 116% & 34 % respectively

Nepal Investment Bank Limited (NIBL) is going to issue Further Public Offering (FPO) of unit shares within two months.The bank will be issuing 90 lakhs, 69 thousand, 3 hundred and 88 units shares as a part of the FPO. The FPO will be issued at a premium of Rs 601.

It is issuing the FPO as per a directive issued by the central bank to maintain at least 30% stake of public shareholders. NIBL has already crossed its deadline set by NRB of Asad end, 2072 to increase the stake of public shareholders to 30 percentages.  At present Promoter and ordinary shareholders’ share structure in the commercial bank stands at 80:20 ratios.

At present the bank has a paid up capital of Rs 6.34 arba. After the issuance of the FPO its Paid up Capital will reach to Rs 7.25 arba. After the FPO, this paid up capital will be the highest among all the commercial banks other than state owned commercial banks.

The FPO will raise a total of Rs 5.45 arba. Out of this Rs 90.69 crore will go into its paid up capital. The remaining Rs 4.54 arab will go to its reserve fund. This will increase its current reserve of Rs 3.907 arba by whopping 116% to Rs 8.45 arba. This pile of cash in reserve can be utilized to give a hefty dividend to the shareholders if bank wishes to do so.

After this FPO, NIBL will be in comfortable position to meet the recently issued NRB directive to increase the paid up capital to Rs 8 arba by the end of Asad, 2074.

The drastic increase in net worth per share of the bank can be attributed to the rise in the reserve of the bank collected from the premium of FPO.  The return of equity will decrease due to the influx of 90.69 lakhs units of shares from FPO which should not alarm the investor.