Five companies apply for merchant banker licence

Kathmandu, November 17

Five companies have applied for operating licence of merchant bankers with the Securities Board of Nepal (SEBON) — the capital market regulator after it reopened the new licence distribution process on July 18.

Aakash Capital, Century Capital, Arch Capital, Wealth Merchant Bank and Janata Capital have filed their applications with the regulatory authority so far.

Paid-up capital

Issue manager

Rs 50m

Securities underwriter

Rs 70m

Share registrar

Rs 30m

Portfolio manager

Rs 50m

Institutional adviser

Rs 30m

Among them, Aakash Capital has received the letter of intent (LoI) from SEBON to develop the required infrastructure for the establishment. “We are studying the documents submitted by the applicants, one of them has already been given LoI and we are looking into others,” said Niranjaya Ghimire, joint spokesperson for SEBON.

SEBON had amended the Securities Businessperson (Merchant Banker) Regulation, 2008, on July 18 and sought applications for merchant bankers. With the amendment of regulation, SEBON has increased the paid-up capital requirement of merchant bankers and working area.

Through the amendment, merchant bankers are allowed to work as institutional advisers. Previously, merchant bankers were allowed to work in four areas — issue manager, securities underwriter, share registrar and portfolio manager.

As per the criteria mentioned in the amended regulation, merchant bankers now need to have a minimum paid-up capital of Rs 30 million to Rs 200 million, depending on the areas in which the merchant banker plans to operate.

Moreover, SEBON has also directed existing merchant bankers to increase their paid-up capital as per amended regulation within current fiscal, 2017-18. Previously, the paid-up capital requirement for an issue manager was Rs 30 million and for security underwriter it was Rs 40 million.

Likewise, a share registrar had to have paid-up capital of Rs 10 million and portfolio manager required to have such capital of Rs 10 million. And for merchant bankers who were providing all the mentioned services, the paid-up capital requirement was Rs 70 million.

Most of merchant bankers are in the process of increasing their paid-up capital as per the directions from the regulator.

According to Dhruba Timalsina, chief executive officer of Siddhartha Capital, merchant bankers that have to increase the paid-up capital as per directions of SEBON are in the process of meeting the requirements.

Currently, a total of 23 merchant bankers are providing various services in the country. A majority of them are serving the investors as issue manager, security underwriter, share registrar and portfolio manager, whereas, some of them are working only as portfolio manager.