Market Watch, Stock News

Prime Life Insurance to Issue IPO from 9th March 2010

Published by Octron on March 9, 2010

After Surya Life Insurance Company last week, Prime Life Insurance floated its share to public from 9th March 2010 (2066 Falgun 25) to 12th March 2010 (2066 Falgun 28) (Sooner), 23 March 2010 (2066 Chaitra 10) (Later). It has floated 10,80,000 units of share worth Rs. 10,80,00,000. Applicants can apply minimum 10 units and maximum 36,000 units. NIDC Capitals Market Limited has been appointed as an issue manger for this IPO.

Prime Life which was established in the year 2007 is promoted by eminent business groups having widely diversified business interests and expertise.Laxmi Bank Limited, one of the leading commercial banks in Nepal, is one of the major promoters with 15 percent stake. The reinsures of Prime Life is with SCOR Global Life, which is a top 5 Life Re-Insurer of the world. Recently, the company which brings into its advertisement with a slogan “Zero or Three, what is going to be?” has attracted many viewers and gives the positive impression of the company as well.

According to the company website its has earned net profit of NPR 56.75 million in the first full year operation. This is an unprecedented achievement in the Nepalese Life Insurance Industry. Sold more than 165,000 policies in just 2 years of operation collecting NPR 330 Million in premiums.

It has increased its distribution network by opening 44 points of representations (including Branches and Sales Offices) all over Nepal. Continues to be among the fastest growing life insurance company with incremental growth in premium, quality of business, customer service and assurance of good returns.

Capital Structure and Ownership Composition after Allotment:

Authorized Capital: Rs. 36,00,00,000

Issued Capital: Rs. 36,00,00,000

Paid-up Capital: Rs. 25,20,00,000 (promoter share 70%)

Public Issue: Rs. 10,80,00,000 (public share 30%)

Total Paid-up Capital after Primary Issue: Rs. 36,00,00,000 (36,00,000 @ Rs. 100).

Board of Directors:

Mr. Rajendra K. Khetan (Chairman) (Share Units: 375000)
Chairman, Gorkha Brewery Pvt. Ltd.
Chairman, Himalayan Snax and Noodles Pvt. Ltd.
Chairman, Everest Insurance Co. Ltd.
Honorary Consul of Portugal with OIH
Senator, Kathmandu University

Mr. Chandra Prakash Khetan (Director) (Share Units: 375000)
MD, Gorkha Brewery Pvt. Ltd.
Honorary Consul of Turkey

Mr. Ratan Lal Sanghai (Director) (Share Units: 275000)
Vice Chairman, Everest Insurance Co. Ltd
Director, Laxmi Bank Ltd
Engaged in garment, textile, plastic, medicine manufacturing

Mr. Gopi Krishna Sikaria (Director) (Share Units: 396000)
Promoter, Mercantile Finance Co. Ltd.
Director, Nepal Petroleum Pvt. Ltd.
Director, Laxmi Bank Ltd.

Mr. Suman Joshi (Director) (Share Units: 540000)
CEO, Laxmi Bank Ltd.

Analysis: Going by the solid BODs, the company looks very much sound and good one to invest your money. At the same time, involvement of major members of the BOD, who are already associated with another Insurance Company (Everest Insurance Co. Ltd.) seems bit sly. Its remarkable to see FY 065/066 profit (Rs. 56.75 Million) for a company which was just above a year old company then [check financial reports]. It’s bit strange the company has been able to make just Rs. 4.1 Million in profit in its first quater for this FY 066/067 after making such gigantic profit last year. Also, it seems bit far fetched for the company to make Rs. 122 Million net profit this year, looking its first quater unaudited report. The company’s plan to increase shareholders in forthcoming years clearly signals prospect of Right Shares in the future.

Verdict: Though there are some unanswered questions, the company does look much better in shape than most other NEVER-HEARD development banks IPOs mushrooming every week or two. If you have enough stagnent cash lying in the bank, then its better to invest some (may be ard. 50 – 60%) in this IPO.

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