Investors may be cool to next IPOs

The investors lukewarm response to NT shares may force the coming Initial Public Offerings (IPOs) of Bank of Asia, Global Bank, Citizen International Bank and Sunrise Bank of Rs 300 million each, think twice.Aggressive pricing and poor advice spoilt Nepal Telecom's mega-issue. Accompanied by structural and regulatory weaknesses in the stock market, it has taken a toll on investor's confidence.
Nepal Development Employment and Promotion Bank is floating Rs 128 million shares from next week. Bank of Asia has even applied for its IPO but due to some technical reasons, it has been put off for now.The investors' confidence now largely depends upon how early the NT shares are alloted also. But Citizen's Investment Trust (CIT), the issue and sales manager, is planning to allot NT shares' as soon as possible.
"We will allot NT shares within one-and-a-half months and distribute the share certificates," said Nandan Hari Sharma, executive director of CIT. Then its up to NT to list its shares at Nepal Stock Exchange, the secondary market.However, the investors do not have a pleasing experience of buying the shares of government entities since these institutions — like Rastriya Beema Sansthan — are reluctant to give share certificates to the investors soon.
"From the preliminary data, it seems that government will be able to raise three-and-a-half billion rupees," said Sharma. "It might still go up as we will receive the complete data by next week," he said, adding that its a sealed bidding so a few million could go up after opening the bid.
However, the investors feel public offers can be revived, if good issues hit the market with face value of Rs 100. Companies like Bank of Asia, Global Bank, Citizen International Bank and Sunrise Bank that have lined up their offers should ensure appropriate marketing to avoid the adverse investor response like NT.
The past few months in the market have been one of those 'periodic bouts of excitement'. Once it even looked like we're set up for a nice rally — due to commercial banks' group — over the next six months but all of a sudden it's just back on roller-coaster ride again. As the much-talked NT shares closed the market was thought to be soaring up but its showing the sign of slow down. "It will help stabilise and expand market from the dominance of banks," Sharma said.
The government had planned to raise at least Rs 9 billion by selling NT's share — 4.5 billion in the first phase and 4.5 billion in the second phase, later. "It has just fall short of around a billion in its target in the first phase," he added. The price of per unit share has been quoted at Rs 600 minimum after adding Rs 500 premium to the face value of Rs 100 for each share.