Kathmandu: Reliable Nepal Life Insurance Company is going to issue IPO with premium for the first time in the insurance industry. The company is going to issue primary shares at Rs. 212 with a premium of Rs. 112.
Reliable has applied to the Nepal Securities Board for the issue of IPO at a premium.The company will issue primary shares at twice of its net worth. The company has a net worth of Rs. 106. The company will issue 6 million primary shares at the rate of Rs. 212 per share, equivalent to Rs 1.27 billion.
Civil Capital is the share issue and sales manager. After the IPO, the company’s paid-up capital will reach Rs. 2 billion and an additional Rs. 672 million will be added to the reserve fund.But the premium amount cannot be distributed as cash dividend. Therefore, the company’s ability to distribute bonus shares will also increase.
As the company’s ability to distribute dividends increases, the company will be able to set better prices in the secondary market. It takes two to three years to earn that amount of premium from profits. But the company will receive the amount at the time of issuance of IPO. The company has a reserve fund of Rs. 820 million. With the addition of premium, the reserve fund will reach Rs 1.49 billion.