Shangri-La Development Bank receives Icra Grade 3 for upcoming 80% right issue

ICRA Nepal has assigned an “[ICRANP] IPO Grade 3”, indicating average fundamentals to the proposed rights issue amounting NPR 1086.78 million of Shangri-La Development Bank Limited (SADBL). The process to issue right share of SADBL is on review in SEBON. The development bank is proposing to issue 80% rights share of 10,867,798.50 numbers of equity shares at the face value NPR 100 each to be issued to the existing shareholders at par. As per Icra Nepal, The average fundamental grading factors in the SADBL’s demonstrated ability to achieve scale growth (CAGR1 ~31% over last three years vs. ~21% for banking industry) while maintaining healthy asset quality (NPLs 0.60% and overall delinquencies of ~5% as of mid-Jul-17) and adequate profitability levels. Comfortable capitalization, experienced management team, diversified franchise (35 branches across 17 districts) with rapid branch expansion plans of management remain positive for incremental growth prospect of SADBL. Prabhu Capital Limited has been assigned as the issue manager for the right issue. The development bank 12^th AGM held on Jestha 19, 2074 had endorsed 1:0.8 right shares to their shareholders. After 80% right issue, its paid up capital will reach Rs 2.44 arba from existing capital of Rs 1.35 arba. It had earned Rs 4.10 crore in the first quarter of the FY 2074/75. As per NRB’s monetary policy, SADBL should increase its paid up capital to a minimum of Rs 2.50 arba. After the issuance of 80% right share, the bank should issue a further Rs 6 crore capital increment. Also, SADBL is in process to acquire Cosmos Development Bank Limited. 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.