Sana Kisan Bikas Bank, RMDC to go public

Sana Kisan Bikas Bank and Rural Microfinance Development Centre (RMDC) are floating shares to the public next week.

Sana Kisan is floating 600,000-unit of shares at a face value of Rs 100 per unit from July 7 to July 10, whereas RMDC is floating its initial public offering (IPO) at Rs 180 per unit, adding Rs 80 premium from July 11 to July 15.

The class D financial institution, Sana Kisan Bikas Bank – Small farmers Development Bank – is floating a total of Rs 60 million worth IPO.
The apex microfinance bank started in July 2001 to provide wholesale credit along with the technical support services, mainly to the Small Farmers Cooperatives Ltd (SFCLs), is the first financial institute to float shares after the credit rating. The IPO is managed by Elite Capital.
Likewise, the wholesale micro credit lender RMDC – the second financial institution to be rated before going to public – has offered 1.56 million units for Rs 180 per unit — at face value of Rs 100 and Rs 80 premium.
The general public can subscribe for 1.45 million unit shares at the premium rate as RMDC has set aside 31,200 units for its employees and 78,000 units for mutual funds.
The IPO of RMDC – managed by Ace Capital –is the third company after Chilime Hydropower and Nepal Telecom and the first financial institution to issue primary shares at a premium price.
RMDC has been allowed by Securities Board of Nepal (Sebon) and Nepal Rastra Bank (NRB) to issue the shares at a premium rate.
Icra Nepal — the credit rating agency — has given an ‘ICRANP IPO Grade 3+’ rating to RMDC and Sana Kisan Bikas Bank's public offering, which means an average ranking.
According to Icra Nepal’s grading system, IPO Grade 1 indicates strong fundamentals and Grade 5 indicates poor fundamentals.
Both the Sana Kisan Bikas Bank and RMDC are expected to give nice return to its shareholders.

Nabil mutual fund oversubscribed, closed

Nabil Bank’s Nabil Balanced Fund I has been well received by the public.

The new fund offer for Nepal’s second mutual fund — Nabil Balanced Fund I worth Rs 600 million — that had opened on March 20, closed today.

"We believe that the offer got oversubscribed by almost four times based on the initial report, though some districts have yet to report the final tally," said chief executive of Nabil Investment Pravin Raman Parajuli.

Nabil Investment is a merchant banking subsidiary of Nabil Bank that works as the fund manager and depository for the mutual fund.

Following the high number of applications for the mutual fund units priced at Rs 10, Nabil Investment will be allotting units worth Rs 750 million as allowed by Mutual Fund Regulations 2067.

Nabil Bank will work as the sponsor for the mutual fund managed by its merchant banking subsidiary.

The scheme's portfolio is planned to contain 70 per cent equities and the rest is divided in fixed income instruments such as government securities and fixed deposits. The objective of the scheme is to balance the risk of the portfolio by investing in a mix of securities.

The close-ended scheme with a five-year tenure is expected to provide 18 per cent annual dividend on average to unit holders.

Nabil Balanced Fund I to open this week

Though mutual funds are safer investment tools, people still have to be well informed of the background of sponsors and fund managers before investing in any scheme, according to Pravin Raman Parajuli, chief executive of Nabil Investment — a merchant banking subsidiary of Nabil Bank — which will launch the scheme ‘Nabil Balanced Fund I’ on March 20-24.
Their risk appetite and professional strength are key, he said, adding that Nabil Investment — the fund manager for the five-year close ended mutual fund scheme ‘Nabil Balanced Fund I’ — which is floating the scheme worth Rs 600 million has sound professional strength to manage the scheme, apart from its sound technical and fundamental background.
“Nabil Investment that has been licensed by Securities Board of Nepal to work as a fund manager and depository for the scheme has a three-year experience in professional portfolio management besides merchant banking, and the backing of Nabil Bank, the sponsor of the scheme that has an experience of three decades,” he said. “Our main target is to mitigate risk and maximise profit for our investors by professionally managing the fund.”
However, the domestic secondary market that is dominated by banks and financial institutions offers limited opportunity for mutual funds to diversify their portfolio. “Limited instruments and lack of sectoral diversification leading to concentration risk are definitely the challenges but more real sector companies entering the secondary market will expand the market,” opined Parajuli.
He was hopeful that the capital market regulator will enhance its capacity and become more dynamic in the wake of more mutual funds being floated in the market and attract more real sector companies with sound corporate governance to expand the secondary market. “The depth and expansion of the secondary market will help in the growth of mutual funds in the future.”
“Besides a strong and professional regulator, government policies will also help chart the future course of mutual funds that are the best instruments to mobilise small investments,” he said.
The general public will be more attracted to mutual funds if the government assures them of tax exemption as is the international practice, Parajuli added.
An investor can invest a minimum of Rs 1,000 on Nabil Balanced Fund I as one can apply for a minimum of 100 units that has a face value of Rs 10 per unit. The units will be listed at Nepal Stock Exchange (Nepse) for trading and can be easily liquidated.

Siddhartha mutual fund from tomorrow

Siddhartha Mutual Fund's New Fund Offer (NFO) – Siddhartha Investment Growth Scheme I – will be open starting tomorrow.

"Collection centres will start accepting applications from tomorrow and will be open till Sunday at the earliest," said chief executive of Siddhartha Capital Dhurba Timilsina.

This is the first mutual fund in a decade. The opening day of this mutual fund scheme coincides with the closing of the existing scheme – NCM Mutual Fund. Nepse suspended NCM Mutual Fund's trading from today following the completion of its 10-year tenure.

Siddhartha Capital – a merchant banking subsidiary of Siddhartha Bank– will launch NFO of the close ended scheme named Siddhartha Investment Growth Scheme I worth Rs 400 million with a five-year tenure.

A unit of the scheme will be primarily priced at Rs 10, and according to the Mutual Fund Guidelines 2069, a single investor has to buy a minimum of 100 units. A single unit holder can obtain 10 per cent of the offer at maximum. The units will later be listed at Nepal Stock Exchange for secondary trading.

"We are planning to allot the fund units to the applicants within the next 20 days, to start buying the securities as soon as possible," pointed out Timilsina.

Siddhartha Capital has appointed 100 collection centres across Nepal. Branches of Siddhartha Bank, Growmore Merchant Banker, Western Development Bank and Goodwill Finance will work as collection centres, covering major cities and towns.

The mutual fund is estimated to offer eight per cent dividend to unit holders in the first year and increase the amount in subsequent years to up to 13 per cent till the end of its tenure, but it can change depending on market conditions.

Nepse posts double digit gain

The Nepse index surged by 2.55 per cent on the first trading day following Dashain holidays.
The index gained 11.13 points as all of the subgroups ended up in the green zone. Better prospects in the future due to the entry of mutual funds might have propelled investors to grab shares now, thus pushing up share prices. Siddhartha Mutual Fund is ready to launch its New Fund Offer before Tihar, and Nabil Mutual Fund will also be coming out before long. Commercial banks and hydropower earned 14.81 points and 14.51 points, respectively. Others also went up by 14.09 points, thanks to Nepal Telecom's last minute surge in share price. Today 160,181 unit shares worth Rs 39.5 million were traded in 829 transactions. Market capitalisation reached Rs 424 billion today.