ICRA Nepal has assigned an “[ICRANP] IPO Grade 4,” to the initial
public offering of Sajha Bikas Bank Limited (SBBL) and Mahila Sahayatra
Microfinance Bittiya Sanstha Limited.
The grading indicates below-average fundamentals for the proposed Initial Public Offering (IPO) of SBBL and Mahila Sahayatra. ICRA Nepal assigns IPO grading on a scale of IPO Grade 1 through IPO Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals.
SBBL is coming up with IPO amounting NPR 49 million and Mahila Sahayatra with Rs 33 million. SBBL is proposing an IPO of 4,90,000 numbers of equity shares and Mahila Sahayatra 3,30,000 shares of face value NPR 100 per kitta.
In both cases, ICRA Nepal has stated that the grading for the two companies were hampered by the companies’ limited track record (both are recently established companies), small scale of their operations, low profitability, lack of diversity in earnings, inferior borrower profile, limited experience of the management, and competition from other BFIs with larger franchise.
In addition, in case of SBBL, high credit concentration (Top 20 borrowers comprised 43.41% of the credit portfolio as of mid-Oct-14) and inferior deposits profile with top 20 depositors concentration at 61.70% have been cited as reasons for the poor grading.
Likewise, in case of Mahila Sahayatra , higher portfolio vulnerability arising from unsecured nature of loan book, absence of centralized credit bureau in microfinance segment, comparably larger ticket size offered in first cycle (up to 100 thousand), reliance on outsourcing model were attributed for poor grading.
The rating agency also said that IPOs of both the finance companies were assigned poor grades because of the uncertain operating environment that financial institutions in Nepal are currently facing.
source: sharesansar.com,11 march 2015
LINK
The grading indicates below-average fundamentals for the proposed Initial Public Offering (IPO) of SBBL and Mahila Sahayatra. ICRA Nepal assigns IPO grading on a scale of IPO Grade 1 through IPO Grade 5, with Grade 1 indicating strong fundamentals and Grade 5 indicating poor fundamentals.
SBBL is coming up with IPO amounting NPR 49 million and Mahila Sahayatra with Rs 33 million. SBBL is proposing an IPO of 4,90,000 numbers of equity shares and Mahila Sahayatra 3,30,000 shares of face value NPR 100 per kitta.
In both cases, ICRA Nepal has stated that the grading for the two companies were hampered by the companies’ limited track record (both are recently established companies), small scale of their operations, low profitability, lack of diversity in earnings, inferior borrower profile, limited experience of the management, and competition from other BFIs with larger franchise.
In addition, in case of SBBL, high credit concentration (Top 20 borrowers comprised 43.41% of the credit portfolio as of mid-Oct-14) and inferior deposits profile with top 20 depositors concentration at 61.70% have been cited as reasons for the poor grading.
Likewise, in case of Mahila Sahayatra , higher portfolio vulnerability arising from unsecured nature of loan book, absence of centralized credit bureau in microfinance segment, comparably larger ticket size offered in first cycle (up to 100 thousand), reliance on outsourcing model were attributed for poor grading.
The rating agency also said that IPOs of both the finance companies were assigned poor grades because of the uncertain operating environment that financial institutions in Nepal are currently facing.
source: sharesansar.com,11 march 2015
LINK
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