With the wave of mergers in microfinance companies, many microfinance companies have been forced to issue FPOs to adjust their share structure. As per the arrangement of the central bank, additional public issue has to be done to maintain the share structure.
The merger of microfinance companies has increased after the central bank increased the capital of microfinance companies and put pressure on them to merge. The number of microfinance companies that have reached more than 90 has now dropped to 76.
In case of merger of microfinance companies, both the companies have already issued IPO and both of them have not issued IPO.
When both the microfinance companies have already issued IPOs, their share structure will remain the same as prescribed by the central bank. Microfinance companies that have not issued an IPO can also issue an IPO after a merger. However, the share structure of the central bank will not be maintained when the microfinance that has already issued an IPO merges with the microfinance that has not issued an IPO.
Microfinance companies are required to issue at least 30 percent of their capital to the public. When microfinance, which has already issued 30 per cent IPO, acquires non-IPO microfinance, the share of the public will be less than 30 per cent, which is why microfinance companies are preparing to issue FPO to adjust the structure.
Basanta Lamsal, president of the Microfinance Bankers’ Association and chief executive officer of Vijay Microfinance, says that FPOs should be issued to adjust the capital structure when merging microfinance institutions that have not issued IPOs. “FPOs will be issued to adjust the capital structure when merging microfinance with IPOs that have not already issued an IPO,” he said.
Vijay Microfinance also merged with Khaptad Microfinance, which did not issue an IPO. Due to which, Vijay Microfinance is also preparing to issue FPO. “We have also merged microfinance that did not issue an IPO,” he said. “We will also issue an FPO to adjust the capital structure.”
So far, about a dozen microfinance companies have been able to issue FPOs. Some of the microfinance institutions have already passed the proposal to issue FPO from the general meeting while some microfinance institutions are preparing to pass the proposal to issue FPO after completing the merger process. Eight microfinance institutions are still in the process of merger. It is seen that they can issue FPO to adjust the share structure after the completion of the merger process.
So far, some microfinance companies, including NRN Microfinance and Summit Microfinance, have passed a proposal to issue FPOs at the general meeting, while Mirmire Microfinance has also appointed a sales manager to issue FPOs.
Similarly, Arambha Chautari Microfinance, Samaj Microfinance, Vijay Microfinance, Ghedighoda Microfinance, Womi Microfinance, Mahuli Community Microfinance, New Nepal Microfinance and Suryodaya Microfinance have also merged microfinance companies that have not issued IPO. As a result, these microfinance companies will also issue FPOs to adjust the share structure .
These are microfinance that can issue FPOs