Kathmandu: National Life Insurance has agreed to purchase the shares of Pakistan’s Habib Bank in Himalayan Bank at Rs 118 per share.
Among the founding investors of the bank, National Life Insurance, along with Prabhu Mahalaxmi Life Insurance and individual investors Ram Prasad Acharya and another person, had also applied for the purchase.
Only National Life Insurance Company has submitted an application meeting all the conditions specified in the public notice for the sale of Habib’s shares in Himalayan Bank.
Himalayan Bank had invited interested investors to purchase the shares held by its founding shareholder, Habib Bank. Among the current founding shareholders, two insurance companies and two individual investors expressed interest.
Habib Bank had submitted a request to sell a total of Rs 2 crore 80 lakh 12 thousand 447.45 (approximately 30 million rupees) shares of Himalayan Bank at a rate of Rs. 112.80 per share in a bulk transaction. Accordingly, the bank had issued a notice on 13 June for the bulk sale of shares by the founding shareholders.
Based on this request, Nepal Rastra Bank (NRB) had directed Himalayan Bank to invite its current shareholders to purchase the shares under Unified Directive 2081, Instruction No. 10.
As per this directive, only investors willing and capable of purchasing all 2 crore 80 lakh shares were eligible to apply. Existing shareholders had to submit their applications within 35 days of the notice’s publication.
Following this call, four founding shareholders applied to purchase the shares. However, only National Life Insurance met all the conditions specified in the notice, as confirmed by Himalayan Bank sources.
Habib had invited applications for the bulk purchase of its shares in the bank. The 35-day notice period ended on Thursday, and the submission process concluded on Friday.
Among the three applications, Prabhu Mahalaxmi Life and two individual investors had applied to buy only a portion of the shares. However, National Life Insurance applied to purchase all shares at Rs 118 per share, as verified by the bank.
Suresh Khatri, CEO of National Life Insurance, confirmed to Clickmandu that the company had applied to buy all of Habib’s shares in Himalayan Bank.
Himalayan Re-Insurance Company had also shown interest in buying the shares. However, since it is not an existing shareholder, it could only apply in the second phase if no founding shareholders came forward. With National Life Insurance’s application, the path for Himalayan Re to acquire the shares has been closed.
Had no founding shareholders applied by Thursday, the bank would have proceeded with the sale to other individuals or institutions. However, since a founding shareholder (National Life Insurance) has agreed to buy all shares, other aspirants are no longer eligible.
Habib Bank holds a 12.93 percent stake in Himalayan Bank, which has a total paid-up capital of Rs 21.65 billion. National Life Insurance has offered a price higher than Habib’s minimum asking rate.
Himalayan Re-Insurance was the most prominent aspirant to buy the shares. Although it had applied to NRB for approval a year and a half ago, the central bank had rejected the request at the time. An agreement between Habib Bank and Himalayan Re had been reached in November 2023, and both companies’ boards had approved the deal before applying to NRB.
NRB had refused approval for three reasons: Himalayan Re needed to submit additional details for the “Fit and Proper Test,” NRB prioritized foreign investors for the share purchase, and since Himalayan Bank’s merger with Civil Bank was less than two years old, selling shares would have resulted in significant capital gains tax losses.
Now that two years have passed since the merger, the tax issue no longer applies. However, with National Life Insurance qualifying to buy the shares, Himalayan Re’s chances have ended.
National Life Insurance can easily purchase the shares under the life insurance investment guidelines. As of the third quarter of FY 2024/25, National Life has invested Rs 1.32 billion in listed public company shares and Rs 1.63 billion in other founding shares. Insurance regulations allow life insurers to invest up to 10 percent of their total investments in shares.
National Life’s total investments exceed Rs 67 billion, meaning it can invest up to Rs 6.7 billion in shares. The company is preparing to buy Habib’s shares in Himalayan Bank for Rs 3.30 billion.
Since this purchase is within the limit, National Life does not need regulatory approval. However, exceeding the limit would have required permission. Himalayan Re had announced its plan to buy Habib’s shares during its annual general meeting on 8 June.
During the AGM, Chairman Shekhar Golchha and CEO Upasana Poudel informed shareholders about the company’s investment diversification strategy.
The AGM minutes noted that with declining interest rates on fixed deposits in banks and financial institutions, Himalayan Re had initiated the process to buy Habib’s shares in Himalayan Bank to enhance investment returns and diversify its portfolio.
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