Things to Know Before Applying for IPO of Rastra Utthan Laghubitta, IPO opens from today
Wed, Feb 16, 2022 5:54 AM on IPO/FPO News, Company Analysis, Exclusive,
Company Info:
Rastra Utthan Laghubitta Bittiya Sanstha Limited started its operation in 2075 as a national level class D microfinance institution, licensed by the Nepal Rastra Bank. After its licensing, RULBSL took over the microfinance business of Nepal Rural Development Organization (NeRuDO), a financial intermediary NGO established in 2054.
As of today, the company has a presence in 39 districts with 94 total branches. Nepal Rural Development, Rastriya Banijiya Bank, Prabhu Bank are the major promoters of the company.
About the issue:
Rastra Utthan Laghubitta Bittiya Sanstha Limited will be issuing 8,50,000 units worth Rs 8.5 crore as Initial Public Offering to the general public from (Falgun 4- Falgun 8, 2078). The early closing date of this issue is on Falgun 8 and if the issue is not fully subscribed till Falgun 8, then it can be extended up to Falgun 18, 2078.
Out of the offered 8,50,000 units; 0.5% of the issued capital i.e. 13,000 units have been set aside for the employees of the company and 5% of the total offered shares to the general public i.e. 42,500 units have been set aside for the mutual funds. The remaining 7,94,500 units are for the general public.
NIBL ACE Capital Limited has been appointed as the issue manager for the IPO issuance.
Applications can be placed for a minimum of 10 units and a maximum of 1,000 units.
After the issuance of 8,50,000 units worth Rs 8.5 crore IPO shares the general public i.e 32.69% of total capital which will together raise its paid-up capital to Rs 26 crore and the promoter/public ratio will be 67.31:32.69.
|
Particulars |
Percentage |
Units |
Amount |
|---|---|---|---|
|
Total Capital |
100% |
2,600,000 |
260,000,000 |
|
Total Issue |
32.69% |
850,000 |
85,000,000 |
|
Employees |
0.5% of issued capital |
13,000 |
1,300,000 |
|
Mutual Fund |
5% of IPO issue |
42,500 |
4,250,000 |
|
Public |
30.5576% of Issued capital |
794,500 |
79,450,000 |
|
Issue Manager |
NIBL ACE Capital Limited |
|
|
|
Issue Open Date |
04 Falgun, 2078 |
|
|
|
Issue Closing date (earliest) |
08 Falgun, 2078 |
|
|
|
Issue Closing date (late) |
18 Falgun, 2078 |
|
|
|
Minimum application |
10 |
|
|
|
Maximum Application |
1000 |
|
|
Capital Structure
|
Particulars |
Amount |
|---|---|
|
Authorized Capital |
500,000,000 |
|
Issued Capital |
260,000,000 |
|
Current Paid-Up Capital |
175,000,000 |
|
Capital after issuance of IPO |
260,000,000 |
Shareholding Structure
|
Shareholders |
Shares Held |
% Held |
Total Amount |
Status |
|---|---|---|---|---|
|
Promoter Shareholder |
1,750,000 |
67.31% |
175,000,000 |
Paid |
|
Public Shareholders |
850,000 |
32.69% |
85,000,000 |
After issuance of IPO |
|
Total |
2,600,000 |
100% |
260,000,000 |
- |
Board of Directors
|
Name |
Designation |
|---|---|
|
Mr. Prahlad Man Mali |
Chairman |
|
Mr. Chiranjibi B.C. |
Director |
|
Mrs. Rita Sapkota Paudel |
Director |
|
Mr. Pradip Kumar Timsina |
Director |
|
Mr. Bimal Dangol |
Director |
|
Mr. Jagannath Kuikel |
Company Secretary |
Company Network and Expansion
Since the main promoter NeRuDO already had 22 branches in five operating districts (Kathmandu, Makwanpur, Bara, Parsa, and Kavrepalanchowk), Rastra Utthan Laghubitta has further established 63 more branches.
Eventually, the company claims that it will be expanded in all of the 77 districts within a short span of time on a requirement basis. The company has said that the population, level of poverty, the likelihood of economic activities, the presence of units of banks and financial institutions, etc. will be guiding factors for establishing new branches.
As of now, the company has branches in all seven provinces. It has 17 branches in Province 1, 30 branches in Province 2, 19 in Bagmati Province, 7 in Gandaki Province, 14 in Lumbini Province, 2 in Karnali, and 5 in Sudurpaschim Province.
ICRA Rating:
ICRA Nepal has assigned the issuer rating of [ICRANP-IR] BB (pronounced ICRA NP issuer rating double B) to RULBSL. Issuers with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations.
Key Strengths:
Good promoter profile and experienced management; adequate track record.
Competitive cost of fund and diversified borrowings
Adequate network base
Key Challenges:
Aggressive credit growth and rising ticket size raise asset quality concerns.
Modest profitability profile amid small scale of operations.
Low penetration of credit bureau in Nepalese MFI sector; risk of over leveraged borrowers remains high.
High regulatory risks.
Moderate capitalization.
Conclusion
Microfinance is one of the most followed sectors by investors in the Nepali Capital Market and one of the reasons is quick-to-market price appreciation. Now, that all the information is available, will you be applying for Rastra Utthan Laghubitta Bittiya Sanstha Limited's IPO?
Rastra Utthan Laghubitta Bittiya Sanstha, which is backed up by strong promoters shareholders, is expected to give IPO investors impressive returns under the assumptions of the basic theory of demand and supply.
The total shares floated by Rastra Utthan Laghubitta Bittiya Sanstha Limited is 850,000 units, of which only 7,94,500 units are available to the general public after the allocation of shares to staff and mutual fund.
If we see the recently concluded IPO, a total of more than 26 lakh applicants applied for the company IPO and we assume that the same or even more craze prevails in Rastra Utthan Laghubitta Bittiya Sanstha Limited's IPO too. Since the 10 kitta rule exists for IPO; 79,450 applicants will be lucky enough to get the shares of Rastra Utthan Laghubitta Bittiya Sanstha Limited.
Hence, if the same number of applicants (or more), i.e., 26+ lakhs apply for this issue then there is a high probability of lottery for 10 units. Since the minimum unit is 10, it is advisable to apply only 10 units in the IPO issue of Rastra Utthan Laghubitta Bittiya Sanstha Limited.
