As a result, the transaction amount has fallen below Rs 1 billion in Nepal Stock Exchange (NEPSE).
Given that all commercial banks have met the minimum paid-up capital requirement of Rs 8 billion as per NRB directive, they have stopped issuing right shares. In the meantime, since Electricity Regulatory Authority (ERC) starts approving right issue of hydropower companies for loan repayment and construction of new project, hydropower companies have accelerated their right issue.
Recently, Upper Tamakoshi obtains approval to issue 1:1 right shares worth Rs 10.59 billion. Similarly, Synergy Power Development obtains approval to issue 50 percent right shares worth Rs 402.2 million and Arun Kabeli obtains approval to issue 100 percent right shares.
National Hydropower obtained approval to issue 50 percent rights and Himal Dolakha Hydropower obtained 75 percent rights. When the issue went undersubscribed, both companies are auctioning the unsold right shares.
Right now, all companies which are in the pipeline of Securities Board of Nepal (SEBON) for right approval are hydropower companies. Chhyangdi Hydropower, Singati Hydro Energy, Himalayan Urja Bikas Company, Arun Valley Hydropower Development are seeing 1:1 right share. Ridi Power Company is seeking 50 percent right shares and Ghalemdi Hydropower is seeking 1:2 right shares approval. Apart from that, many companies which got approval from ERC have not applied for right approval from SEBON. above that, most of the companies which are issuing initial public offering (IPO) are also hydropower companies.
Just like hydropower sector, insurance companies are also issuing right shares. The companies are issuing the right shares to meeting the minimum paid-up capital of Rs 5 billion for life insurance companies and Rs 2.5 billion for non-life insurance companies.
Previously, the minimum paid-up capital of life insurance companies was Rs 2 billion and of non-life insurance companies was Rs 1 billion.
Raju Raman Poudel, Spokesperson of Nepal Insurance Authority said that the authority has decided to approve right issue of those merged companies that could not meet the minimum paid-up capital even after merger.
Among non-life insurance companies, Himalayan Everest Insruance, Neco Insurance, United Ajod Insurance, Sanima GIC Insurance are issuing right shares. Similarly, SuryaJyoti Life Insurance, Sanima Reliable Life Insurance are issuing right shares among life insurance companies. NIA informed that these companies will be given approval to issue 10-25 percent right issue.
