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

2. 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

3. 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.

4. 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.

5. 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.

6. 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.

7. 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

8. 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.

9. 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.

10.   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 **
NPR *
NPR (based on annual reports
2066/67)

11. Issue price
NPR 1500 (floor price)
NPR 600 (floor price)
NPR
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

12. 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

13. 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

14. 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).

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

16. 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
TRHPR
Taragaon Regency Hotels Limited Preference Share
2,121,750
212,175,000

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

18. 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

19. 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.

20. 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.

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

24. 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