Saturday, April 3, 2010

ADBL floates largest ever primary issue

Agricultural Development Bank Ltd (ADBL) is floating 9.6 million units of shares -- worth Rs 960 million -- at a face value of Rs 100 per unit from Sunday. This is the largest primary issue in the history of the banking history in Nepal. Ace Development Bank has been appointed issue manager of ADBL that has its strength in its network, which is the largest one among the Nepali banks. If it introdues new technology and operate efficiently, ADBL can lead the market. Else, being a government bank, political intereference and frequent change of CEOs would have negative impact on its financial health.
Investors should be aware of the fact that the bank, being a government undertaking, took long to distribute rights shares' certificates. The bank distributed the rights shares' certificates after great hue and cry. "It might do the same in the case of distribution of share certificates and not list these shares at the secondary market on time, keeping investors ion tenterhooks," said Rabindra Bhattarai, stock market analyst. "The success of the largest issue also depends on how investors react as the bank has Rs 450 million negative reserve and the secondary market is performing badly since the last couple of months." The secondary market also could not perform well due to the liquidity cruch in recent months.
"Since it is the largest issue and the market is witnessing poor performance, investors might not get value also," Bhattarai added.
If the shares are oversubscribed, the issuance will close on Wednesday -- the fourth day -- according to rule.
Meanwhile, the NMB Bank Ltd's 7,15,000-unit of further public issue has closed from Friday, according to DCBL Bank Ltd, the issue manager of the first further public issue in the Nepali capital market. NMB Bank Ltd has floated further public issue for the public at Rs 285 per unit -- adding Rs 185 premium to the face value of Rs 100.

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