Friday, July 5, 2013

A Brief Description of Rural Microfinance Development Centre (RMDC) as its IPO is at our door step.

Rural Microfinance Development Centre (RMDC) ¿ a wholesale micro credit lender ¿ will launch the initial public offering (IPO) of its premium added shares from July 11.

RMDC has offered 1.56 million units of primary shares for Rs 180 per unit ¿ at face value of Rs 100 with added premium of Rs 80. The general public can subscribe for 1.45 million unit shares at the premium rate as RMDC has set aside 31,200 units for its employees and 78,000 units for mutual funds.

The IPO, managed by Ace Capital, will be open from July 11 to July 15. But in case of under subscription the issue will be open till July 25.

RMDC is the third company ¿ after Chilime Hydro and Nepal Telecom ¿ and the first financial institution to issue primary shares at a premium price. RMDC has been allowed by Securities Board of Nepal and Nepal Rastra Bank (NRB) to issue the shares at a premium rate.

ICRA Nepal ¿ the credit rating agency ¿ has assigned an `ICRANP IPO Grade 3+' rating to RMDC's public offering. The symbol indicates that the fundamental of the issuer ¿ RMDC ¿ is average. According to ICRA Nepal's grading system, IPO Grade 1 indicates strong fundamentals and Grade 5 indicates poor fundamentals.

RMDC has already sold 300,000 units of shares worth Rs 30 million face value at Rs 180 per unit to International Finance Corporation (IFC) ¿ a private sector lending window of the World Bank Group. Likewise, Siddhartha Bank has also bought 140,000 unit shares at a premium at various rates of up to Rs 315 per unit.

RMDC is promoted by NRB, 13 class `A' commercial banks, five class `D' microfinance institutions, and Deposit and Credit Guarantee Corporation. It provides micro finance to beneficiaries through wholesale lending through other microfinance development banks, cooperatives and financial NGOs.

By the end of the third quarter, RMDC's paid up capital was at Rs 364 million following share purchases by Siddhartha Bank and IFC. After the public issue, RMDC will have a paid capital of Rs 520 million.

There are seven microfinance development banks listed at Nepal Stock Exchange. These microfinance stocks are well traded in the stock market and are in high demand due to their handsome dividend payouts.
src : nepalsharemarket

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