Growing share issues lure merchant banks

The number of companies providing merchant banking services is growing along with a rise in share issues. The latest entrant is Grow More Merchant Bankers Limited which has received an operating license from the Securities Board of Nepal (SEBON). Four other companies are awaiting approval, said SEBON officials. "We received the license on Thursday," said Jhapat Bohora, chairman of Grow More and president of the Development Banks Association.

Bohora added that Grow More had been permitted to operate as issue manager, share registrar and investment manager. "We are also going to apply for permission to do underwriting," he said. Grow More has been promoted by 30 development banks and finance companies and has a paid-up capital of Rs. 100 million. According to the Merchant Banker Regulation 2008, a company aiming to engage in all four aspects of merchant banking is required to have a paid-up capital of at least Rs. 70 million.

The four prospective merchant banks awaiting approval from SEBON are Nabil Bank, Capital Investment and Development Company, National Investment and Capital Markets and Akash Investment. Nabil has received a letter of intent from SEBON asking it to prepare the infrastructure required for merchant banking, said Prabin Raman Parajuli, Nabil's head of merchant banking.

It is the third commercial bank after NMB Bank and Development Credit Bank to diversify into merchant banking. "We are studying the documents of the other three companies," said Niraj Giri, spokesman of SEBON. A group led by Meghraj Ghimire, Sadhuram Parajuli and others has promoted Capital Investment and Development Company. Another group consisting of Sujan Kafle and others has promoted Akash Investment, and Nandan Hari Sharma, former chief executive officer of Citizen Investment Trust, is heading National Investment and Capital Markets.

There are presently 17 merchant banks in the country. With new companies coming up, those possessing a license to do only merchant banking fear a loss in business. Gyan Bahadur G.C., chief executive officer of Elite Capital, said they were facing uneven competition from banks and other financial institutions.
Source: eKantipur