August 30: In recent days, companies have been issuing initial public offering (IPO) of shares at a premium price. Shares in the secondary market of securities are available at a cheaper than the shares of insurance and hydropower companies at premium rates. However, investors are not much interested in shares at a lower price in the secondary market.

Sun Nepal Life, Reliable Life, IME Life, Mandu Hydropower, Sonapur Minerals, recently issued IPOs at Rs 116 to Rs 257 per share at premium rate. Similarly, Citizen Life is also issuing IPO of ordinary shares at Rs 244 per share at premium rate from 1 September.

The attraction of investors is high in the primary marker even when the IPO is being sold for more than Rs 200 per share. Between 1.2 million to 1.5 million people apply for every company's IPO. However, this is not the case in the secondary market, which offers shares at a lower rate.

Capital market expert Mukti Aryal says that since the IPO at premium rate gives good returns in a short period of time, investors are attracted to it. He gave the example of IME Life Insurance's IPO sale at Rs 236.91 per share at rate premium and said, “The company’s first transaction was at Rs 529.50 per share. Due to this, investors got good returns in a short time.”

He says that after mergers and acquisitions, the number of commercial banks has now dropped to 20. Experts say that since the business could not grow according to the increased capital after the merger, the market price has also gone down along with their earnings per share.

According to the financial statements of the last fiscal year, bad loans of banks have increased significantly.

Along with the decline in the overall stock market, the problems seen in the financial system also seem to have had an impact on the share prices of banks. Although there is enough investable funds in the banking system, the share prices of bank are falling due to lack of demand for loans, high interest rates, and increasing bad loans.

The share price of 6 of the 19 commercial banks listed in NEPSE is below Rs 200. The share price of Kumari Bank, Prabhu Bank, Nepal Investment Mega Bank, Laxmi Bank, Prime Commercial Bank and Citizens Bank is below Rs 200 per share. The share price of Kumari Bank, the cheapest among these six banks, closed at Rs 157.40 per share on Tuesday.

Similarly, the shares of Himalayan Bank, Global IME Bank, NMB Bank and Nepal Bank Limited are available from Rs 200 to Rs 250.10 per share. Apart from these commercial banks, the share prices of hydropower companies have also become very cheap. On Tuesday, the share price of Himal Dolakha Hydropower Company was Rs 135.30 and that of National Hydropower Company was Rs 146.40.