PrimeLife primary issue oversubscribed by ten times

PrimeLife Insurance Company's initial public offerings (IPOs) has been oversubscribed by 10 times. "We floated shares worth Rs 108 million and have received 1,31,607 applications worth Rs 1.872 billion," said Resta Jha, chief executive officer (CEO) of the insurance company. "It's over 10 times the requisition."

PrimeLife Insurance floated its public issue on March 9 and closed on March 12. It issued 10,80,000 units of ordinary shares with a face value of Rs 100 per unit. The insurance company has appointed NIDC Capital Market the issue manager for the IPO worth Rs 108 million.

"Investors have reposed great faith in our company," he said adding that at a time of liquidity crunch too, they received such an overwhelming response to their primary issue. "It shows that the investors have gone through our books that show a net profit of Rs 56.7 million -- after tax -- in its first year of operations itself."

The insurance company has so far issued 18,9000 policies and collected Rs 520 million worth of premium. After the current issue, the company will have a paid-up capital of Rs 360 million.

According to Beema Samiti's (Insurance Board) rule, insurance companies have to increase their paid-up capital to Rs 500 million by 2070 BS. "So, our company plans to give bonus shares worth Rs 140 million to increase its paid-up capital to Rs 500 million from the present Rs 360 million to fulfil the Beema Samiti regulation," Jha said adding that the company has been performing better and is in a condition to give good returns to its investors.

A week ago, Surya Life Insurance had also floated 10,80,000-unit of ordinary shares with a face value of Rs 100 per unit worth Rs 108 million and its shares were oversubscribed by around five times. Manakamana Development Bank also floated Rs 300 million worth shares and its primary issue too was oversubscribed by around five times.

The liquidity crunch had hit 'slightly' earlier two issues of Surya Life Insurance and Manakamana Development Bank. Investors lost confidence in the capital market recently also due to the bearish secondary market.

Next month, Agriculture Development Bank Ltd (ADBL) is floating the largest ever Initial Public Offering (IPO) in the banking history of Nepal.

After 38 years of its inception, it has got licence as an A-class bank from Nepal Rastra Bank (NRB). Now, ADBL has decided to go public with Rs 960 million worth ordinary shares from April 4. Ace Development Bank has been appointed the sales and issue manager. ADBL had registered Rs 1.72 billion profit before tax in the last fiscal year.

Asian Life Insurance to go public from October 27

Asian Life Insurance Company is floating 10,80,000-unit -- worth Rs 108 million -- of primary shares at a face value of Rs 100 per unit on October 27-30.
"After this public issue worth Rs 108 million the paid-up capital of the company will be Rs 360 million," said the company that has Rs 252 million paid-up capital at present.
Of the total issue, 43,200-units are meant for the staff of the company. Contrary to other public issues, the company has allowed people to apply for minimum 10-units also and one can apply for a maximum of upto 20,000-unit. One must apply with a passport size photo. After complaints about fake applications, Securities Board of Nepal (Sebon) has made it mandatory to apply with photo and bank account number for the primary issue.
The regulatory authority of the capital market permitted the company on September 16 to go public and the Company Registrar's Office gave the go-ahead on October 8.
NIDC Capital Markets is the issue and sales manager of the insurance company that has -- according to unaudited accounts -- posted Rs 3.32 million profit in the fiscal year 2008-09. The company has projected Rs 15.29 million profit for this fiscal year. According to its prospectus, it is not going to give any dividend for another three years.
Asian will be the 18th listed insurance company in Nepse as there are already 17 listed insurance companies -- under Nepse's insurance companies sub-group -- with a total of 20,703,504-unit shares at Rs 100 face value making a total total paid up worth Rs 2,070,350,400.
However, their contribution is negligible -- around only one per cent in the total trading in the secondary market. The increase in the listed insurance companies in the secondary market might boost their contribution in the days to come.
In the fiscal year 2007-08, there were only 21 insurance companies but in 2008-09 the number increased to 25.
Rastriya Beema Samiti (Insurance Board) -- an autonomous body established to develop, systemise, regularise and regulate the insurance business of Nepal under Insurance Act, 1992 -- has been trying to make the insurance sector more transparent like the banking sexctor.
According to Nepal Rastra Bank, in the fiscal year 2008-09, the total paid-up capital of listed companies stood at Rs 61.1 billion -- an increase of 107.5 per cent in comparison to the fiscal year 2007-08.
This increase was due to the additional listing of securities. In the increased amount, the portion of rights shares was 30.7 per cent, bonus shares 6.3 per cent and ordinary shares 63 per cent. Comparatively, Nepse was flooded by rights shares as these increased by 55 per cent while bonus shares increased by 31 per cent and ordinary shares by 14 per cent.
Nepse listed 37 companies' bonus shares worth Rs 1924.77 million, 50 companies' rights share worth Rs 9307.8 million and 14 companies' ordinary shares worth Rs 19087.5 million in the last fiscal year, according to the central bank.
Meanwhile, Prime Life Insurance is also gearing for its public issue soon.