KATHMANDU, May 5: Janata Bank´s shares were oversubscribed by more than two times by the time it wrapped up its initial public offering (IPO) on Friday.
The 27th commercial bank, which floated 6 million units of shares with face value of Rs 100 each, had collected Rs 1.4 billion and still counting at the time when this news was filed Friday evening. The amount is way past the target of Rs 600 million which the bank had planned to raise from the primary market.
“We are very overwhelmed by the response we got from the public,” Bijay Pant, an overjoyed CEO of Janata Bank, told Republica, expressing hope the shares would be oversubscribed by over three times by the time final figures are tallied. “This sends a positive message to the capital market at a time when investor confidence is at an all time low,” he said.
The country´s IPO market has currently hit the rock bottom, with only four companies, including Janata, reaching the primary market to raise capital this financial year, as against 16 last fiscal year. Even those that reached the market - except Janata - faced problems while raising capital, as share investment is being avoided due to steep fall in stock prices of most of the listed companies.
Janata Bank was also skeptic about launching the IPO in this climate. But because of its status as a commercial bank and one-and-half-month-long roadshows that were conducted prior to the IPO, Janata was able to attract investor interest.
“We travelled from east to west of the country to generate awareness about stock investment,” Srijesh Ghimire, CEO of NMB Capital, one of the issue managers for Janata Bank, told Republica, referring to roadshows carried out in places from Biratnagar, Birtamod, Dharan, Birgunj, Narayangad, Pokhara, to Damauli, Baglung, Butwal Bhairahawa, Nepalgunj and Dhangadi.
“We had never resorted to such a measure to sell shares of a commercial bank,” Gjimire said and expressed happiness as the hard work had finally paid off.
Oversubscription is generally good news for firms launching IPOs. But it makes investors, especially retail, uncomfortable, because they fear they might not be able to purchase shares, as companies resort to lucky draw to allocate stocks.
To address the problem, the Securities Board of Nepal (Sebon), the securities market regulator, recently introduced a new provision under which shares should be distributed on proportional basis. This provision means every person who has applied for shares will not have to return empty handed.
Janata Bank plans to list its shares on the stock market within two months.
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