Why issue manager of Nepal Grameen upcoming FPO has kept minimum 50 units investment provision when investing 10 units itself will attract lottery? SEBON must mull over this issue
Sun, Sep 3, 2017 6:03 AM on Latest, Exclusive, Featured, Stock Market,
Securities Board of Nepal (SEBON) has implemented the Securities Issue and Allotment Guidelines, 2074 including several guidelines for IPO/FPO allotment, IPO listing, bonus share registration, right share issuance and commencement of trading after merger/acquisition.
Under the new regulation, IPO/FPO should be allotted within minimum 30 days and maximum 50 days, depending upon the number of applicants it attracts and listed within 2 months of the IPO/ FPO closing date. Likewise, the Board has also made it mandatory for all applicants to be allotted a minimum of 10 units of shares—now replacing the existing provision to set aside 40% shares for retail investors and 60% shares for other investors under the securities allotment guidelines, 2068. This guidelines is really good move for the small investors and overall development of capital market of Nepal.
The guidelines clearly stated that all the IPO/FPO investors will be first allotted 10 units and then remaining units will be allotted to the investors demanding 20 units and more. Here, again 10 units will be allotted to such investors and if all the investors are unable to get minimum 10 units each then allotment will be based on lottery basis among the applicants.
So based on above new guidelines from SEBON it will be really useless to apply huge amount on upcoming IPO and FPO of any companies. Understand why?
If we see the IPO/FPO applications trend of last two year, the number of applicants easily exceeds 100,000 despite of any companies’ issues. The biggest issues like Nepal Investment Bank FPO, Standard Chartered Bank FPO, Nepal life Insurance FPO and many more easily attracted more than 200,000 applicants.
The recently closed public issues of Nepal Hydro Developer Limited (IPO) and Pokhara Finance Limited (FPO) has attracted more than 170,000 and 49,000 applicants. This issue was after the implementation of new guidelines by SEBON.
Due to the introduction of new rule which includes minimum 10 units to every applicant (if enough) will definitely attract more investors in coming days and the introduction of ASBA system has really made IPO/FPO investment easy and accessible to all.
Nepal Grameen Bikas Bank Limited (NGBBL) is selling 975,000 units share worth Rs 9.75 crore on FPO to general public from Bhadra 27, 2074. The last traded price of NGBBL at Nepal Stock Exchange is Rs 755. Seeing the difference between issue price and market price, the investors will be definitely interested on this FPO issue. So we can easily expect minimum approx 150,000 numbers of applicants.
The available 975,000 units of NGBBL can to allotted to only 97,500 number of applicants (10 units each) means the expected all 150,000 applicants won’t be able to get minimum 10 units shares also. There will be confirmed lottery to get minimum 10 units also, in NGBBL FPO case. Analyzing this, it don’t seem to benefit at all to invest more than Rs 1000 for 10 units in this FPO.
But the company and issue manager has made provision for investors to apply minimum 50 units and also they can apply maximum upto 4,800 units. Keeping maximum 4,800 units is completely useless where investors applying for 10 units itself will fall in to lottery in this case. Implementing not minimum 10 units’ provision and only 50 units and maximum upto 4800 units will mislead investors for sure in this issue.
The new rule has come in to implementation of SEBON but still the issue managers are publishing their offer letter based on old guidelines, so far. So the concerned authorities like SEBON must direct the issue manager to change this format and allow investors to apply minimum 10 units, now onwards.
Sandeep Bikram Rana
If we see the IPO/FPO applications trend of last two year, the number of applicants easily exceeds 100,000 despite of any companies’ issues. The biggest issues like Nepal Investment Bank FPO, Standard Chartered Bank FPO, Nepal life Insurance FPO and many more easily attracted more than 200,000 applicants.
The recently closed public issues of Nepal Hydro Developer Limited (IPO) and Pokhara Finance Limited (FPO) has attracted more than 170,000 and 49,000 applicants. This issue was after the implementation of new guidelines by SEBON.
Due to the introduction of new rule which includes minimum 10 units to every applicant (if enough) will definitely attract more investors in coming days and the introduction of ASBA system has really made IPO/FPO investment easy and accessible to all.
Nepal Grameen Bikas Bank Limited (NGBBL) is selling 975,000 units share worth Rs 9.75 crore on FPO to general public from Bhadra 27, 2074. The last traded price of NGBBL at Nepal Stock Exchange is Rs 755. Seeing the difference between issue price and market price, the investors will be definitely interested on this FPO issue. So we can easily expect minimum approx 150,000 numbers of applicants.
The available 975,000 units of NGBBL can to allotted to only 97,500 number of applicants (10 units each) means the expected all 150,000 applicants won’t be able to get minimum 10 units shares also. There will be confirmed lottery to get minimum 10 units also, in NGBBL FPO case. Analyzing this, it don’t seem to benefit at all to invest more than Rs 1000 for 10 units in this FPO.
But the company and issue manager has made provision for investors to apply minimum 50 units and also they can apply maximum upto 4,800 units. Keeping maximum 4,800 units is completely useless where investors applying for 10 units itself will fall in to lottery in this case. Implementing not minimum 10 units’ provision and only 50 units and maximum upto 4800 units will mislead investors for sure in this issue.
The new rule has come in to implementation of SEBON but still the issue managers are publishing their offer letter based on old guidelines, so far. So the concerned authorities like SEBON must direct the issue manager to change this format and allow investors to apply minimum 10 units, now onwards.
Sandeep Bikram Rana
