Issue Managers face hard times

Issue managers will be facing more heat regarding the coming Initial Public Offerings (IPOs), if recent allotments are indications of it.
Last week, NIDC Capital Markets Ltd alloted shares of Global Bank amid high drama. A week prior to that NMB Bank had alloted the shares of Clean Energy Development Bank in more or less similar conditions.
Why are issue managers facing controversy in recent days? Is it because investors are becoming more aware and ready to fight for their rights or Nepal Stock Exchange (Nepse) and issue managers have not managed to make the share allotment more transparent.
"We are not involved in the allotment," Dr Chiranjivi Nepal, chairman of Securities Board of Nepal (Sebon), said adding that issue managers are required to 'only' inform the board and it can allot shares.
A group of investors freaked out, when they came to know that NIDC Capital Market Ltd - the issue manager of Global Bank - allotted shares to six of the 11 'big investors' who had applied for over 0.1 million to 0.2 million-unit of shares - ie, over Rs 10 to 20 million.
On the other hand, only 13,180 of the total 80,369 applicants who applied for 50-unit (eqivalent to Rs 5,000) got the shares.After investors who applied for 50-unit of shares were allotted 20-unit of shares, they flew into a lather. Angered investors held up the allottment programme hostage and forced the issue manager, NIDC Capital Markets and Nepal Stock Exchange to change the module of the allotment.
Finally, the allotment module was changed after reducing the number of 'big investors' to two from six and distributing the remaining shares to the lowest group.
However, the repetition of such controversy has raised serious questions about the possibility of issue managers affecting the IPOs to come.
Global Bank had floated its 3000,000-unit shares with Rs 100 face value each to the public. This is probably the largest IPO among banks in recent days.
The 19th commercial bank, Global, also has the largest number of shareholders now. Though Nepse and Sebon are more active these days, issue managers need to get their act together.


Anamoloies
*On August 10, Nepse suspended the transactions of two brokers - broker no. 5, Market Securities Exchange, and broker no. 8, Ashutosh Brokerage and Securities - for manipulating the rules.
*On August 13, Sebon suspended the licence of Nepal Finance Ltd (Nefisco) and stopped it from operating as a merchant bank due to its alleged 'fraudulent' transaction of promoters' shares.
*On August 24, Sebon suspended Shilpa Securities Pvt Ltd (broker no. 20) until further notice on the charge of providing false information.