Kathmandu: Mahalakshmi Life Insurance Company mulls issuing IPOs at a premium prior to the merger with Prabhu Insurance. Mahalaxmi Life has signed a memorandum of understanding (MoU) with Prabhu Life Insurance.
Mahalaxmi Life will issue 9 million public shares and raise Rs. 900 million for the paid-up capital. After the allotment of the proposed IPOs, the promoter-to-public shareholding ratio will be 70:30. The promoters of Mahalaxmi Life Insurance plan to collect additional funds from the public issuing IPOs at a premium. The excess amount collected from the premium will be allocated to the reserve funds. Its current paid-up capital is Rs. 2.1 billion only.
A company earning net profits for two FY in a row can issue IPOs at a premium at twice its net worth per share. According to the financial report of FY 2076-77, the net worth per share of Mahalaxmi Life is Rs. 107.68. The net worth per share will be even higher as the audit of the FY 2077-78 and 2078-79 is yet to be finalized.
The insurer has Rs. 325.9 million in its reserve fund. Prabhu Life has paid up capital of Rs.2 billion and Rs. 590 million in the reserve fund. The paid-up capital of the