Presented by: Salim L. Awale & Raj Maharjan Raising Capital Presented by: Salim L. Awale & Raj Maharjan

Promoter shares (Price Ceiling): 51% ownership by promoters. Pattern in BFIs is 70:30.   In Hydro's, promoter shares have a lock-in period of 3 years. Both have equal claim on the NPAT and dividend

Price of Nabil, NabilP and NIB, NIBPO at different Time Interval No standard formula for calculation of promoter share prices .  Price of Nabil, NabilP and NIB, NIBPO at different Time Interval Date Nabil NabilP Diff (%) NIB NIBPO Jan, 2013 1580 1049 50.62% 387 –   Jan, 2014 2050 1300 57.69% 754 Jan, 2015 2012 1365 47.40% 781 507 54.04% Jan, 2016 1890 1445 30.80% 825 726 13.64% Jan, 2017 1390 1000 39.00% 655 564 16.13% Aug, 2017 1768 1282 37.91% 770 683 12.74% *freely tradable and lucrative as its ordinary shares, offer same returns in terms of dividend and other rights.

Why there is hassle related to Promoter shares? Listed at not more than 50% of price of ordinary share. Clearance letter (CIB report) to confirm that the buyer is not blacklisted. Offer to existing promoter with minimum 35 days pre notice. Transactions of promoter shares must pass through examination of NRB. Buyer needs to disclose source of funds.

Conversion into general Approval from the Nepal Rastra Bank (NRB) NRB allows promoters to offload their shares and turn them into ordinary shares after the lock-in period of five years is over Annual general meetings endorse the decision to increase public equity in the institution.

IPO Over Rs 2 Billion Worth of IPOs are in the Pipeline Sixteen various hydropower companies are set to issue IPOs Four micro finance company.

A Procedure for an IPO Process in Nepal 1. Issuing company going public approaches merchant banks 2. Registration of securities 3. Preparation of prospectus 4. Agreement with the underwriters 5. Obtain letter from Stock Exchange Ltd. 6. Registering Prospectus with SEBON 7. Finalizing the approval of issue

A Procedure for an IPO Process in Nepal 8. Orientation of intermediaries 9. Finalizing the date of issue opening 10. Publishing announcement letter 11. Opening of the Issue 12. Share Allotment 13. Refund of non allotted share application money 14. Distribution of Share Certificate 15. Listing of shares with Nepal Stock Exchange Ltd.

Allotment Investors applying for shares less than NRs. 50,000 are retail investors 40% of the issued securities have to be mandatorily allocated for them. Remaining 60% are to be allotted under pro rata basis of allotment. All applicants to be allotted a minimum of 10 units of shares as per new regulation. However, if total applications by the retail investors represent more than 40% of total applications received all shares will be allotted proportionately.

  Overview of SCBNL, NTC and CHCL issue under different pricing mechanism Company SCBNL NTC CHCL Type of Issue Sell of Cross holding share through offer documents IPO Date of Issue 2061/3/4 2064/10/9 2068/2/17 Modality Closed bid auction Open invitation Par Value of offerings NPR 31,248,800 NPR 1,500,000,000 NPR 134,400,000 Net worth per share at the time of offering NPR 403.15** NPR 178.63* NPR 476.72 (based on annual reports 2066/67)

Issue price NPR 1500 (floor price) NPR 600 (floor price) NPR 408.36 Number of shares issued 312,488 15,000,000 1,344,000 shares subscribed 551,221 (1.76 time subscribed) 5,299,690 (0.35 times subscribed) (7 times subscribed) Average bid price NPR 1548 NPR 612 - First day closing price ) NPR 1720 (July 5, 2004) NPR 900

The companies can only issue FPO if At least two years in profit in last five years. Approved by AGM Reasons to issue FPO at premium Process of FPO pricing As per clause 30 of the act, descriptive  document should be published Companies can Issue FPO in 5 terms interval

Upcoming FPO Company No. of shares Premium Price Per Share (Rs.) NMB Bank 11,415,163 (undeclared) Sagarmatha Insurance Company Nepal Grameen Bikas Bank Limited 975,000 100 Pokhara Finance Limited 983,682 220 Butwal Power Company 4,081,000 470 Premier Insurance Company 659,565 1,004

Pricing of FPO Securities Issuance and allotment guidelines Provisions: capitalized earnings, net worth per share or book value per share, 180 days’ average of closing market price and discounted cash flow (current price of cash flow to be achieved in the future).

Preference Share Fixed Dividend Low Tradability Institutional holding Issuing companies own terms Cannot be counted in paid up capital.

Everest Bank Limited Convertible Preference 2,000,000 100 200,000,000 Symbol Company Listed Share Paid-up (Rs) Total Paid-up Capital (Rs) As Of: EBLCP Everest Bank Limited Convertible Preference 2,000,000 100 200,000,000 2018-03-28 TRHPR Taragaon Regency Hotels Limited Preference Share 2,121,750 212,175,000 2014-07-07

Debenture Market(bank) based financing Non disclosure by private companies Legal procedure avoidance Trustee (Third Party) Non collateral based

S.N Symbol Company Listed Share Paid-up Total 1 BOKB2069 Bank of Kathmandu Rinpatra 2069 200,000 1000 200,000,000 2 EBLB2061 Everest Bank Limited Rinpatra 2061 300,000 300,000,000 3 HBLB2072 Himalayan Bank Limited Rinpatra 2072 500,000 500,000,000 4 KBLB2070 Kumari Bank Limited Bond 2070 400,000 100 40,000,000 5 LBLB2072 Laxmi Bank Limited Debenture 2072 350,000 350,000,000 6 NABILB2075 Nabil Bank Limited Bond 2075 7 NEAB2069 Nepal Bidhut Pradhikaran Rinpatra 2069 1,500,000 1,500,000,000 8 NICBB2070 Nepal Industrial & Commercial Bank Limited Bond 2070 9 NIBB2071 Nepal Investment Bank Bond 2071 225,000 225,000,000 10 NIBDEB Nepal Investment Bank Debenture 2078 11 NIBB2067 Nepal Investment Bank Limited Bond 2067 12 NIBB2070 Nepal Investment Bank Limited Bond 2070 250,000 250,000,000 13 NIBB2072 Nepal Investment Bank Limited Bond 2072 14 nsb2079 Nepal SBI Bank Limited Debenture 2079 400,000,000 15 SBIB2070 Nepal SBI Bank Rinpatra 2070

Right Share (Additional Capital): Justify the ratio of issuance of rights shares Should have completed two years of operation since going public. Should have received credit rating as per the set rules Issued capital should be settled by the time of issuance of rights shares Inform SEBON about financial closure of the project Get approval at least five working days ahead of issuing a public notice of rights issuance or further public issuance.

Why Right issue? Because company may need more funds and they would like to raise the same from market by issuing shares rather than going with debt option. Why to existing shareholder only? Since they are already invested in company, it's a general way to give them a chance to invest more and some discounted price.

Bonus Share Additional shares to existing shareholders Given from retained earning Can be given to paid up capital ony

Additional Materials to know more: Securities registration and issue regulation 2073 Company Act 2063 Bonus share guide lines 2067 SEBON Newsletter 11,12, 12, 14 SEBON Quarterly publications