How will Prabhu Insurance Meet Required Paid-up Capital of Rs 2.5 Bn?

Apr 12, 2024 02:51 PM Merolagani

Prabhu Insurance has called out annual general meeting (AGM) without right share approval from Nepal Insurance Authority (NIA).

The company is conducting the AGM on May 2 in its head office at Tinkune, Kathmandu.

Currently, Prabhu Insurance has a paid-up capital of Rs 1.37 billion. The company is distributing 4.75 percent stock dividend to its shareholders for the last FY. After bonus share capitalization, its paid-up capital will reach Rs 1.44 billion. The company is planning to meet the capital through right issue or other any option as per the permission by the Insurance Authority.

Although the company is planning to issue the right share or opt for other options for capital increment, it has not obtained approval from the regulatory body as yet. Raju Raman Poudel, Spokesperson of NIA said that the company has not obtained approval for the right issue.

Prabhu Insurance has also sold 1,979,424 units of shares of Nepal Reinsurance Company under its ownership. It sold the shares at a minimum price of Rs 280.

Previously, the company had submitted capital plan to NIA to bring foreign venture capital to raise capital. When the plan did not succeed, it forwarded a plan to raise the capital by selling land under its ownership. The company could not sell land due to economic recession, thus, it forwarded a plan to sell promoter shares of Reinsurance Company and Kumari Bank. Although the company managed to sell promoter shares of Re-Insurance Company, it has not been able to sell promoter shares of Kumari Bank.

Before the foreign venture partner, the company had signed an initial agreement of merger with Ajod Insurance, however, Ajod Insurance broke the agreement midway and merged with United Insurance to start a joint transaction in the name of United Ajod Insurance. After the fiasco, the company planned to bring foreign venture partner.

NIA had warned the company of multiple failures to implement the submitted plans.

The regulatory body has a policy of restricting right issue of companies not opting for merger once.  Prabhu Insurance had sought approval of 65 percent right issue after its plan of bring in foreign venture. When the authority did not approve right issue, the company is planning to raise the capital through property sale or other viable options available.

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