Things to know for prospective investors about IPO of NIC Asia Laghubitta; advisable to apply minimum 20 units

Things to...

Company profile

NIC Asia Laghubitta Bittiya Sanstha is a “D” class financial institution licensed from Nepal Rastra Bank.  It is a 100% subsidiary company of NIC Asia Bank Ltd. and primarily engaged in providing microfinance loans based on the Joint Liability Group (JLG) model with each group consisting of a minimum of five members. Its headquarter is at Bheri- 04, Khalanga, Jajarkot, and was established on Shrawan 10, 2074, and got a microfinance license from Nepal Rastra Bank on Mangsir 5, 2074 and started its financial transaction on Poush 5, 2074. The microfinance currently has 70 branches in 20 districts. The 20 districts include Banke, Bardiya, Bara, Dang, Jajarkot, Jumla, Kailali, Kanchanpur, Kapilvastu, Makwanpur, Nawalparasi, Nuwakot, Rukum West, Rupandehi, Salyan, Sidhupalchowk, Surkhet.

NIC Asia Laghubitta is a national level microfinance and can operate any part of the country upon approval from Nepal Rastra Bank.

The deposit balance of NIC Asia Laghubitta as of Chaitra end, 2076 stands at Rs 1.01 Arba and borrowed Rs 5.60 Arab, and has loans and advances of Rs 7.22 Arba. Its current paid-up capital stands at Rs 1 Arba.

About the issue

NIC Asia Laghubitta Bittiya Sanstha Limited is issuing 47,55,000 units ordinary shares worth Rs 47.55 crore to the general public from Ashad 10, 2077. The early closing date of this IPO issue is on Ashad 14, 2077 and if the issue is not subscribed till Ashad 14 then this issue can be extended up to Ashad 24, 2077.

Out of the offered 47,55,000 units; 0.5% of issue capital i.e. 74,000 units have been allotted for the employees of the company and 5% of total offered share to the general public i.e. 2,37,800 units have been allotted for the mutual funds. The remaining 44,43,200 units are for the general public.

Applications can be placed for a minimum of 10 units and a maximum of 2,00,000 units.

Sanima Capital Limited has been appointed as the issue manager for the IPO issuance.

The paid-up capital will reach Rs 1.48 Arba after the issuance of the public shares. After the IPO issue; public holding will be 32.13% and promoters holding will be 67.87%. All the promoter’s shares are owned by NIC Asia Bank Limited

The company registered office is in Bheri-4, Khalanga, Jajarkot and its third-quarter net worth per share is Rs 122.64.

Credit Rating:

CARE Ratings Nepal Ltd. (CRNL) has assigned grading of „CARE-NP IPO Grade 4+‟ to the proposed Initial Public Offer (IPO) of NIC Asia Laghubitta Bittiya Sanstha Ltd. (NALB). „CARE-NP IPO Grade 4+‟ indicates Below Average Fundamentals. CRNL assigns IPO grades on a scale of Grade 1 to Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals.

Key Grading Strengths:

  • Strong institutional promoter
  • Experienced board members and management team
  • Geographical diversification of business
  • Comfortable capitalization level
  • Considerable growth in business over a short period of time
  • Comfortable Liquidity Profile
  • Good asset quality is the initial year of operation and low seasoning of the loan portfolio
  • Improved financial performance over the period
  • Diversified sector-wise credit portfolio distribution

Source: (http://careratingsnepal.com/rating-list/)

Capital Structure:

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Management Team:

Financial Highlights:

Conclusion

Microfinance is one of the most pursued sectors by investors in the Nepali capital market and one of the reasons is quick to market price appreciation. Now, that all the information is available, will you be applying for NIC Asia Laghubitta's IPO?

How much to apply:

NIC Asia Laghubitta's is issuing 47,55,000 unit shares and after allocation of shares to staff and mutual fund 44,43,200 units available for general public.

If we see the recently concluded IPO of Nepal Reinsurance Company; a total of 391,626 applicants applied for the company IPO and we assume that same or even more craze prevails in NICA Asia Laghubitta IPO's too. Since the 10 kitta rule still exists for IPO, 444,320 applicants will be lucky enough to get the shares of  NIC Asia Laghubitta. 

Hence, if the same number of applicants (or more) who applied for Nepal Reinsurance IPO's, apply for this issue then there is a high probability of getting confirmed 10 units whereas, few investors may be lucky to get 10 units extra. So it's advisable to apply 20 units minimum in the IPO issue of NIC Asia Laghubitta Limited.