Everything you need to know before applying for NIC Asia Balanced Fund; Issue open till Bhadra 05, 2076

Mon, Jul 29, 2019 4:46 PM on Exclusive, Mutual Fund, Stock Market,

-ShareSansar

Company Profile

NIC ASIA Capital Limited's new mutual fund scheme “NIC Asia Balance fund (NICBAL)” is promoted by NIC Asia Bank and managed by NIC Asia Capital.

NIC Asia Bank Limited (NIC Asia) is one of the top 5 “A” Class (Commercial) banks of Nepal in terms of Interest Income, Net Interest Income, Deposits and Advances as on April 14, 2019. The 93.68% of the total shareholding of the Bank is held by individual general public and 6.32% by corporate entities as on July 16, 2018; among which 51% belongs to promoter group shares and 49% belongs to general public.

NIC Asia has certified by ISO 9001:2008 Certificate for Quality System on Commercial Banking Activities. The Bank has two wholly owned subsidiary companies operating in Nepal namely NIC Asia Capital Limited (undertake merchant banking activities) and NIC Asia Laghubitta Bittiya Sanstha Limited (microfinance business).

The paid-up capital of NICA stands at Rs 8.83 arba and reserve and surplus stands at Rs 5.5 arba as of third quarter of fiscal year 2075/76. It has recorded the profit of Rs 2.73 arba upto the third quarter of 2075/76.

The bank currently has 292 branches, 52 extension counters and 315 ATM terminals in operation all over the nation.

NIC Asia Capital is a wholly owned subsidiary of NIC Asia Bank. It is licensed by SEBON to act as a merchant banker (including services like issue management, underwriting, share registrar etc) and investment banker (including services like asset management services, private placement, portfolio management, depository participant etc). It started its fund management and depository services by launching a seven-year close-ended MF scheme in March 2018.

About the issue

NIC ASIA Capital Limited's new mutual fund scheme “NIC Asia Balance fund” worth Rs 1.25 arba with the maturity of 10 years is open for application.

The issue had opened since Shrawan 4, 2076 and the closing date was on Shrawan 12, 2076 at the earliest. However, since the issue manager didn't receive enough application, the issue has been extended till Bhadra 5, 2076.

This fund is managed by NIC Asia Capital limited and sponsored by NIC Asia Bank limited and runs under NIC Asia mutual fund.

The issue will be of 12,50,00,000 worth Rs 10 per unit. An investor can apply for minimum of 100 units and maximum of 1.75 crore units.

85% of the total issue i.e. 10.625 crore units will be open for general public and remaining 15% will be kept as seed capital for sponsor NIC Asia Bank Limited and NIC Asia Capital Limited.

Currently, NIC Asia Growth Fund (NICGF), managed by NIC Asia Capital is also in the market. The Net Assets Value (NAV) of NICGF stood at Rs 11.15 as of Jestha 2076.

Dividend Payout

The dividend will be paid out of realized profits in proportion to investments made. The Retained earnings will be re-invested if any.

Supervisors of NICBAL

General asset allocation of the proposed scheme's portfolio

Capital structure of NIC Asia Bank

Capital structure of NIC Asia Capital

Board of directors of NIC Asia Bank

Board of directors of NIC Asia Capital

Management team of NIC Asia Capital

Investment avenues

Securities that are registered with SEBON
Securities called for public offering
Securities that are listed in NEPSE
Debentures, Treasury Bills and other instruments of money market issued by Government of Nepal or Government Agencies receiving full guarantee or protection of GoN or NRB
Bank deposits
Money Market Instruments
Other areas as prescribed by SEBON

Rating

ICRA Rating of NIC Asia Capital

ICRA Nepal has reaffirmed the [ICRANP] AMC Quality 3 (AMC3) fund management quality rating (FMQR) assigned to NIC ASIA Capital Limited (NICAC), indicating adequate assurance on the fund management quality.

Strength and opportunities

Full ownership and continued technical and management support of NIC ASIA Bank Limited, a Class ‘A’ commercial bank (rated [ICRANP-IR] A- for issuer rating) along with a well-established organisational structure.
Satisfactory investor service practices and the processes followed by the company. This has helped NICAC in maintaining the NAV of its first mutual fund (MF) scheme, despite a significant downturn in the market index (NEPSE), since its launch.
Experienced background of the fund supervisors involved in the supervision of the company’s MF scheme.
A stable government working towards increasing the pace of economic growth along with ongoing improvements in the capital market and the regulatory framework remain positive factors.

Weaknesses and threats

The requisite extent of involvement of the supervisors in managing the schemes is not clearly mandated through a strong legal framework and hence remains a rating concern.
A stable government working towards increasing the pace of economic growth along with ongoing improvements in the capital market and the regulatory framework remain positive factors.
Company’s limited track record in the Nepalese capital markets as a fund manager and the evolving nature of the MF industry and risk management framework with respect to fund management.
An uncertain operating environment created by high volatility in the NEPSE and the unavailability of hedging tools for investment in the market also accentuate the rating concerns.
Turnover in senior management of NICAC in recent periods also remains a concern.

CARE Nepal Rating of NIC Asia Bank

CRNL has assigned Issuer Rating of “CARE-NP A (Is)” to NIC Asia Bank Limited (NICA). Issuers with this rating are considered to offer adequate degree of safety regarding timely servicing of financial obligations, in Nepal. Such issuers carry low credit risk.

Key Rating Strength

Long track record, experienced promoters and management team
Adequate capitalisation & capital adequacy
Geographical diversification through branches
Consistent growth in loans & advances and deposits
Considerable growth in total income and net profit over the period
Good asset quality and declining GNPLs
Diversified loan portfolio, concentration towards retail and SME portfolio
Improving CASA ratio
Comfortable liquidity profile
Declining deposits concentration and moderate advances concentration

Key Rating Weaknesses

Decreasing return on total assets (RoTA)
Increasing operating expenses
Intense Competition
Exposure to regulatory risk related to industry

Source: https://icranepal.com/releases.php and https://careratingsnepal.com/rating-list/

Financial performance of NIC Asia Bank

Financial performance of NIC Asia Capital

Performance of NIC Asia Growth Fund

NIC Asia Growth Fund (NICGF), a closed-end 7-years mutual fund scheme managed by NIC Asia Capital Limited with NIC Asia Bank Limited as the fund sponsor.