Demand high for Nepal Bank shares, but sellers not available
Published on Monday, December 10, 2012
5:23 PM //
Business
Shares of Nepal Bank Limited (NBL) could not be traded on the stock
market on Sunday due to lack of investors who wanted to sell the stocks
of the state-controlled bank.
Trading of the bank´s stocks, which were relisted on Nepal Stock Exchange (Nepse) a week ago, began on Sunday, as per the rule which does not allow share trading within a week of the company´s enlistment on the stock market.
“There was huge demand for Nepal Bank stocks on Sunday, with brokers placing orders for over 50,000 units of shares,” Stock Broker Anjan Poudel said. “But since there were no sellers, the bank´s shares could not be traded.”
Nepal Bank had listed 3.8 million units of shares on the stock market on December 2, with a face value of Rs 100 each. "If some of the investors had sold their stocks, the market would have determined a value for the bank´s shares. But since none (of the shareholders) were interested today (Sunday) we could not say how much they are worth," Poudel said.
According to Poudel, many investors probably did not want to sell their shares on Sunday as they may have been waiting for other shareholders to put their shares up for grabs, ultimately creating a demand for them and pushing their prices up.
Prior to delisting of Nepal Bank´s stocks in March 2004 - owing to its enrolment in the finance sector reform program - the value of each share had once shot past Rs 3,500 level. “Because of this shareholders are probably not interested in selling them at Rs 100.”
Another reason for lack of interest in putting shares up for sale, according to Poudel, is the bank´s plan of issuing rights shares.
The bank had relisted its shares on the market to give impetus to its plan of raising fresh capital through issuance of rights shares. "Many shareholders are certain about getting additional shares at Rs 100 each, which can be sold at a higher price later," Poudel said. "They are probably waiting for that moment."
The bank is issuing rights shares in the ratio of 1:9.5 to its existing shareholders. This means holder of every share at the bank will have to purchase 9.5 additional shares at a price of Rs 100 each. This is expected to inject Rs 3.62 billion in the bank, of which Rs 1.39 billion has been obtained from the government, which is one of the largest promoters of the institution.
The bank is 40.49 percent owned by the government and 49.94 percent by the public. Other major shareholders of the bank include Rajendra Kumar Khetan, who holds 6.93 percent stake in the bank, NCC Bank, which owns 4.92 percent shares in the bank, and other organizations, which hold 2.4 percent stake at the bank.
"During discussions, all of these shareholders had agreed to purchase rights shares issued by the bank," Shrestha had earlier told Republica.
Despite this commitment, some of the shareholders may not be able to purchase rights shares floated by the bank, as they hold significant stakes in other banking institutions as well.
Since Nepal Rastra Bank bars promoters of one financial institution from holding more than one percent share in other banking institutions, some of these shareholders may have to appoint buyers on their behalf. "If not, rights shares allocated for them will be auctioned off," the bank said
Source: Republica
Trading of the bank´s stocks, which were relisted on Nepal Stock Exchange (Nepse) a week ago, began on Sunday, as per the rule which does not allow share trading within a week of the company´s enlistment on the stock market.
“There was huge demand for Nepal Bank stocks on Sunday, with brokers placing orders for over 50,000 units of shares,” Stock Broker Anjan Poudel said. “But since there were no sellers, the bank´s shares could not be traded.”
Nepal Bank had listed 3.8 million units of shares on the stock market on December 2, with a face value of Rs 100 each. "If some of the investors had sold their stocks, the market would have determined a value for the bank´s shares. But since none (of the shareholders) were interested today (Sunday) we could not say how much they are worth," Poudel said.
According to Poudel, many investors probably did not want to sell their shares on Sunday as they may have been waiting for other shareholders to put their shares up for grabs, ultimately creating a demand for them and pushing their prices up.
Prior to delisting of Nepal Bank´s stocks in March 2004 - owing to its enrolment in the finance sector reform program - the value of each share had once shot past Rs 3,500 level. “Because of this shareholders are probably not interested in selling them at Rs 100.”
Another reason for lack of interest in putting shares up for sale, according to Poudel, is the bank´s plan of issuing rights shares.
The bank had relisted its shares on the market to give impetus to its plan of raising fresh capital through issuance of rights shares. "Many shareholders are certain about getting additional shares at Rs 100 each, which can be sold at a higher price later," Poudel said. "They are probably waiting for that moment."
The bank is issuing rights shares in the ratio of 1:9.5 to its existing shareholders. This means holder of every share at the bank will have to purchase 9.5 additional shares at a price of Rs 100 each. This is expected to inject Rs 3.62 billion in the bank, of which Rs 1.39 billion has been obtained from the government, which is one of the largest promoters of the institution.
The bank is 40.49 percent owned by the government and 49.94 percent by the public. Other major shareholders of the bank include Rajendra Kumar Khetan, who holds 6.93 percent stake in the bank, NCC Bank, which owns 4.92 percent shares in the bank, and other organizations, which hold 2.4 percent stake at the bank.
"During discussions, all of these shareholders had agreed to purchase rights shares issued by the bank," Shrestha had earlier told Republica.
Despite this commitment, some of the shareholders may not be able to purchase rights shares floated by the bank, as they hold significant stakes in other banking institutions as well.
Since Nepal Rastra Bank bars promoters of one financial institution from holding more than one percent share in other banking institutions, some of these shareholders may have to appoint buyers on their behalf. "If not, rights shares allocated for them will be auctioned off," the bank said
Source: Republica
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