Udhyam Bikas Bank floats its IPO from 13th December

After Resunga Bikas Bank release IPOs this month, another financial institution, Udhyam Bikas Bank ltd going to release 1,50,000 unit of shares to general investors including 3,000 units to its employees at the face value of Rs. 100 per share [Announcement letter]. Even secondary market condition still in disastrous, primary market booming. Over subscription of recent IPO releases shows huge public attraction to primary market.

Udhyam Bikash Bank is issuing its IPO from 13th December 2009 till 16th December 2009. The minimum number of shares to be applied is 50 and maximum is 10000 units. NIDC Capital Market Ltd., Kamalpokhari, Kathmandu has been appointed as the Issue Manager for this IPO.
Udhyam Bikas Bank Limited is licensed as “B” Class Financial Institution by NRB with registered central office at Bharatpur, Chitwan which is its major area of operation. The announcement notice claims to open branches and extension counters in Chitwan, Tanahu and Kaski as required, after accomplish the criteria of NRB.

Capital Structure and Ownership Composition after Allotment:
Authorized Capital: Rs.10,00,00,000
Promoter Shares: Rs. 3,50,00,000 (70%)
Public Shares: Rs.1,50,00,000 (30%)
IPO Date:
Opening Date: 13th December 2009 (2066 Mangsir 28)
Closing Date: 16th December 2009 (2066 Poush 1) (Sooner) , 27th December 2009 (2066 Poush 12) (Later)

As per the promoters are concerned, out of 51 promoters, 6 promoters has experience in banking sector. On the management side, its little bit strange to see President Dr. Sunil Maske, who do not have experience in Banking sector. Other members in the management team, Mr. Sanjeev Pradhan has little experience in Financial institution (what type of work and designation? not mentioned.) And remain member are from other business sector and affiliated with non banking organization.
Profit & Loss Account

Verdict: We advise all the investors to check the financial statement published along the announcement letter properly before jumping into this IPO wagon. With recent flooding of IPOs, this development bank doesn’t have not a single thing that could stand out compared to other IPOs. Its normal run-of-the-mill kind of bank, nothing special. Looking its forecasted profit and loss statement, only thing this bank might be giving out in the future will be right shares. Even Rs. 2 Dividend per annum seems to be difficult for this bank in coming years.

Source: IPO Announcement & Nepse news