Global IME Bank mulls Further Public Offering

Investors will soon get an opportunity to buy primary shares of Global IME Bank.

The bank is planning to issue 352,140 unit shares to the public as Follow-on Public Offering (FPO) to meet the regulatory requirement. The bank formed following mergers with five financial institutions has called for a special general meeting for investors in Birgunj on June 1 to endorse the FPO.

Following the last merger with Commerz and Trust Bank Nepal, promoters hold 70.60 per cent of the shares — marginally higher by 0.60 per cent than acceptable by regulation.

The bank has 27.8 million units listed at the stock exchange that closed at Rs 610 per unit as of Thursday on secondary trading.

Global IME Bank is also eligible to issue shares at a premium rate above face value as it has been distributing dividends since the past three years — the only condition imposed by Securities Registration and Issue Regulations 2008. However, the price cannot be more than the net worth per share that stands at Rs 147.16.

This is going to be the second financial institution in the history of Nepali capital market that is offering further issue.

The FPO is an offering of additional shares after a company has made an Initial Public Offering (IPO). It is also known as Further Public Offering for the companies already listed at the stock exchange but want to raise funds by issuing some more equity shares.

According to the capital market regulation, any listed company can issue shares through Further Public Offering if the company has been earning net profit in the last two years of the five years of existence. Likewise, the net worth per share has to be more than per share paid-up capital.

Back in March 2010, NMB Bank had undertaken FPO after it was upgraded to a commercial bank from a finance company. The bank had issued 715,000 shares at Rs 285 per unit.

Likewise, in 2011, DCBL Bank had planned to hold a similar public offering, but the regulator — Nepal Rastra Bank — did not approve the decision.

Global IME Bank’s share trading had resumed from April 30 after a five-month hiatus due to its merger process with Commerz and Trust Bank in April. Since then, the share price has jumped by almost 30 per cent. Global Bank had issued 30 per cent of its shares to the public in July 2008.

The current Global IME Bank was also formed after a merger between Global Bank, IME Financial Institution and Lord Buddha Finance in July 2012. Likewise, in July 2013, the bank also merged with Social Development Bank and Gulmi Bikas Bank. Lastly, in April, it merged with the fifth financial institution Commerz and Trust Bank. The numerous mergers and the share swap ratios skewed the bank’s share structure.

source: the himalayan times,17 may 2014
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