Primary shares worth Rs78.59 billion were listed on the Nepal Stock Exchange (Nepse) in the fiscal year 2017-18 as companies scrambled to raise their capital requirement by issuing rights and bonus shares. In 2016-17, primary shares worth Rs93.17 billion hit the secondary market. According to Securities Board of Nepal (Sebon) records, 112 companies issued bonus shares valued at Rs33.08 billion in fiscal 2017-18. The issuance of bonus shares ranged from 5 percent to 114.27 percent. Rastriya Beema Sansthan Company issued the highest number of bonus shares to its shareholders.
Most of the listed companies, banks and financial institutions, insurance companies, hydropower companies, hotels and manufacturing companies, issued bonus shares to their shareholders.
Sebon deputy spokesperson Niranjaya Ghimire said most of the insurance companies and banks and financial institutions issued bonus shares to raise their paid-up capital within the deadline set by their regulators.
Nepal Rastra Bank raised the capital requirement for commercial banks to Rs8 billion from Rs2 billion and to Rs2.5 billion from Rs640 million for national level development banks. The central bank also ordered national finance companies to boost their paid-up capital to Rs800 million from the existing Rs200 million.
Likewise, the Insurance Board asked life insurance companies to maintain a minimum paid-up capital of Rs2 billion and non-life insurance companies to raise the paid-up capital to Rs1 billion by the end of 2017-18. Ghimire said most of these companies had asked for permission to issue rights and bonus shares to fulfil the capital requirement.
During the review period, the regulator okayed 55 companies to issue rights shares worth Rs25.70 billion. Most of them were banks and financial institutions and insurance companies. Prabhu Bank made the largest rights issue valued at Rs2.35 billion.
Likewise, Sebon permitted 21 companies to make initial public offerings (IPOs) of Rs8.3 billion during the review period. A majority of them were hydropower companies. Similarly, there were further public offerings by six companies worth Rs11.51 billion.
Meanwhile, Rs4.80 billion worth of mutual fund schemes also hit the market— Siddhartha Equity Fund, Sanima Equity Fund, NIC Asia Growth Fund and Citizen Mutual Fund-1.
Last year, the country’s only stock exchange saw an excess supply of primary shares and a slump in demand. As a result, the Nepse index fell 370.31 points over the year while market capitalisation also declined by Rs421 billion.
The Kathmandu Post