NIC ASIA Bank to Bolster Capital Base with 2:1 Rights Issue, Appoints NIMB ACE Capital as Manager

NIC ASIA Bank Limited, one of Nepal's leading commercial banks, has taken a significant step towards strengthening its financial foundation and fueling future growth by appointing NIMB ACE Capital Limited as the official issue and sales manager for its forthcoming rights share issuance. This strategic move underscores the bank's commitment to maintaining robust capital adequacy and supporting its ambitious expansion plans in the dynamic Nepali financial landscape.

The proposed rights offering will see NIC ASIA Bank issue shares in a compelling 2:1 ratio, meaning existing shareholders will have the opportunity to subscribe to two new shares for every one share they currently hold. This translates to a substantial issuance of 74.58 million rights shares, each priced at a face value of Rs 100. This issuance represents a significant capital injection, equivalent to 50 percent of the bank's current paid-up capital, which stands at an impressive Rs 14.91 billion. The scale of this offering highlights the bank's proactive approach to capital management.

Crucially, the Nepal Rastra Bank (NRB), the central bank and primary regulator of financial institutions in Nepal, has already granted its approval for this rights issue. This initial regulatory clearance is a vital milestone, paving the way for the subsequent stages of the process. The bank is now poised to secure further necessary approvals from other regulatory bodies, including the Securities Board of Nepal (SEBON) and the Office of the Company Registrar, before the issuance can officially commence. These regulatory steps ensure transparency, investor protection, and adherence to established market norms, providing confidence to potential subscribers.

According to the bank's official statements, the primary objective behind this substantial capital raise is multi-faceted. Firstly, the funds generated from the rights offering will be instrumental in significantly strengthening NIC ASIA Bank's overall capital structure. By increasing its equity base, the bank aims to enhance its financial resilience and reduce reliance on external borrowings. Secondly, and perhaps most critically for a financial institution, the capital infusion will lead to a marked improvement in its Capital Adequacy Ratio (CAR). A higher CAR not only ensures compliance with stringent regulatory requirements but also provides the bank with greater capacity for lending and absorbing potential financial shocks, thereby bolstering its stability. Finally, and looking towards the future, this capital will be strategically deployed to support the bank's long-term business expansion initiatives and strategic growth plans. This could include expanding its branch network, investing in advanced digital banking solutions, developing new financial products, and increasing its lending portfolio across various sectors of the economy, ultimately driving profitability and shareholder value.

The appointment of NIMB ACE Capital Limited, a reputable and experienced merchant banking firm, as the issue and sales manager is a testament to the bank's commitment to a smooth and efficient capital-raising process. NIMB ACE Capital will be responsible for overseeing the entire rights issue procedure, from managing the application collection and processing to ensuring fair allotment of shares, handling refunds, and facilitating the eventual listing of the new shares on the Nepal Stock Exchange (NEPSE). Their expertise will be crucial in navigating the complexities of a large-scale public offering and ensuring a seamless experience for shareholders.

For existing shareholders of NIC ASIA Bank, this rights issue presents a valuable opportunity to increase their stake in a growing institution, often at a price that may be attractive compared to the prevailing market rate. While non-subscription would lead to a dilution of their ownership percentage, participating in the rights issue allows them to maintain or even enhance their proportional ownership and benefit from the bank's future growth fueled by the strengthened capital base. This move by NIC ASIA Bank is also indicative of the broader trend within the Nepali banking sector, where institutions are continuously seeking to optimize their capital structures to meet evolving regulatory standards and capitalize on the nation's economic development opportunities. The successful completion of this rights issue is expected to further solidify NIC ASIA Bank's position as a robust and forward-looking financial player in Nepal.

The formal agreement solidifying this partnership was officially signed by Mr. Rupesh Luite, Chief Financial Officer of NIC ASIA Bank, and Mr. Sachindra Dhungana, Deputy Chief Executive Officer of NIMB ACE Capital, representing the commitment and collaboration between both esteemed institutions.