Reinsurance firm to issue IPO worth Rs1.28 billionNepal Reinsurance Company Limited (NRCL), the first of its kind in the country, is issuing initial public offerings (IPO) worth Rs1.28 billion to the public. The company is allotting 16 percent of its targeted paid up capital of Rs8 billion at the base rate of Rs100 per unit share to the general people.
Nepal Reinsurance Company Limited (NRCL), the first of its kind in the country, is issuing initial public offerings (IPO) worth Rs1.28 billion to the public. The company is allotting 16 percent of its targeted paid up capital of Rs8 billion at the base rate of Rs100 per unit share to the general people.
The company made the announcement public on Sunday. According to the company, it has initiated the move after receiving commitment from its promoters to maintain their part of shares to the prescribed amount.
The government established NRCL in November 2014 in a bid to stem massive capital outflows for reinsurance purposes. The NRCL began operations as ‘Insurance Pool’ in 2003 to cover damage caused by terrorism and was converted to its present form on November 7, 2014.
At present, the reinsurance company has a paid up capital of Rs5 billion. NRCL Chief Executive Officer Chirayu Bhandari said with issuing the public shares and the addition of capital by its promoters, the company will have paid up capital of Rs8 billion.
Currently, promoters of the NRCL include the government and 32 companies. The government holds 43.5 percent share in the company. Similarly, Vishal Group and Rastriya Beema Company Limited have shares of 4.22 percent and 3.86 percent respectively in the NRCL. The rest of the promoters include eight life insurance companies and 17 non life insurers operating in the country.
According to Bhandari, the annual general meeting of NRCL held on April 13 had given the company the go ahead to issue IPOs. However, the company was delayed in issuing
IPOs as the company’s Article of Association had provisioned the NRCL to go into public only after the promoters maintain 84 percent shares out of the paid up capital.
“Now that we have received the commitment from our existing promoters to raise their capital amount, we will initiate the process to receive approval from Securities Board of Nepal and other concerned authorities for the purpose,” Bhandari said.
Bhandari said they have also planned to issue bonus shares worth Rs1 billion in the future. As per the government rule, insurers cannot distribute dividend and bonus shares until five years after their establishment. With this regard, NRCL shareholders will have to wait for one more year to receive dividends.