17th October 2025, Kathmandu
The Nepal Stock Exchange (NEPSE) has announced the suspension of share trading for two prominent microfinance institutions, Samaj Laghubitta Bittiya Sanstha Ltd. (SLBSL) and Grameen Bikas Laghubitta Bittiya Sanstha Ltd. (GBLBSL), marking the final regulatory step before their integrated operations commence.
Share Trading Suspended Before Merger
This move is a customary and mandatory procedure in the Nepalese capital market to facilitate the smooth transition of shareholder data, re-registration of securities, and the consolidation of shares before the new, merged entity begins trading under a single banner. This strategic merger is a significant event in Nepal’s microfinance sector, aiming to create a larger, more financially robust entity to enhance outreach and operational efficiency across the country.
The Road to Consolidation: Merger Details and Regulatory Timeline
The merger process between Grameen Bikas Laghubitta and Samaj Laghubitta has been a phased journey, driven by the central bank’s push for consolidation within the microfinance sector to mitigate risks, streamline operations, and enhance financial stability. The microfinance sector in Nepal has seen a flurry of mergers and acquisitions in recent years, a trend largely encouraged by the Nepal Rastra Bank (NRB) to address issues like multiple borrowing and the oversupply of microfinance services. Mergers like this one are intended to lead to stronger institutions that can better serve the rural populace.
The key milestones in this merger process include:
Initial Agreement: The merger process kicked off with the initial agreement signed on Falgun 17 (around February 29, 2025).
Shareholder Approval: Both companies secured the necessary endorsements from their respective general assemblies on Asar 28 (around July 12, 2025).
Final Regulatory Approvals: The final green light was received from the Nepal Rastra Bank (NRB) on Asoj 23 (around October 9, 2025), and subsequently from the Office of the Company Registrar on Asoj 26 (around October 12, 2025), officially transferring all assets and liabilities of Samaj Laghubitta to Grameen Bikas Laghubitta.
Joint Operation Commencement: The unified business operations will officially begin under the name Grameen Bikas Laghubitta Bittiya Sanstha Limited starting from Kartik 2, 2082 (October 18, 2025). The consolidated entity will maintain the existing head office of Grameen Bikas Laghubitta in Butwal, Rupandehi.
The Crucial Role of Share Trading Suspension
The suspension of share trading for both Samaj Laghubitta and Grameen Bikas Laghubitta is a mandatory step outlined in the regulatory framework, specifically the Merger and Acquisition Directive, 2079 (Clause 9(13)) in the context of NEPSE. This temporary halt is essential for several critical administrative and technical reasons:
Preventing Price Manipulation: By suspending trading just before the commencement of joint operations, NEPSE prevents speculative price movements that could be triggered by last-minute news or rumors about the final merger outcome. This maintains fairness and integrity in the market during the transition phase.
Facilitating Data Reconciliation: The most practical reason is to allow for the accurate re-registration and dematerialization of all shares in the name of the new, merged company. The central depository system (CDS) must consolidate the shares of both SAMAJ and GBLBS holders based on the final swap ratio and create a unified shareholder register for the new entity.
Share Consolidation and Listing: The new combined shares must be listed on NEPSE under the single ticker of Grameen Bikas Laghubitta. This administrative process, including the application of the swap ratio to all existing holdings, requires a window where no new trades occur. While regulatory efforts have been made to shorten this suspension period—with the Securities Board of Nepal (SEBON) issuing a directive to limit the suspension for merger and acquisition processes to a maximum of 15 working days—it is a non-negotiable pause for data integrity.
Impact of the 1:1 Share Swap Ratio on Investors
The merger has been finalized with a 1:1 share swap ratio. This particular ratio has a direct and significant impact on the shareholders of both institutions.
For Samaj Laghubitta Shareholders: An investor holding 100 shares of Samaj Laghubitta (SLBSL) will receive 100 shares of the newly merged entity, Grameen Bikas Laghubitta (GBLBS). Given that the share price of SLBSL before suspension was NPR 1,875 and GBLBSL was NPR 780, a 1:1 swap ratio is highly favorable for SLBSL shareholders in terms of the number of shares they retain. They effectively swap a higher-priced stock for an equivalent number of shares in the lower-priced stock, suggesting the valuation of the smaller institution (SLBSL) was strong relative to the larger one (GBLBSL) in the context of the Due Diligence Audit (DDA).
For Grameen Bikas Laghubitta Shareholders: An investor holding 100 shares of Grameen Bikas Laghubitta (GBLBS) will also receive 100 shares of the merged entity. Since GBLBS is the acquirer and the name of the merged entity, their share count remains the same. The focus for these investors now shifts to the long-term performance of the new, larger institution, which boasts a significantly increased paid-up capital of approximately NPR 100.535 crore (NPR 98.25 crore + NPR 2.285 crore).
The Future of the Merged Microfinance Powerhouse
The newly formed entity, operating under the name Grameen Bikas Laghubitta Bittiya Sanstha Limited, is poised to become one of the larger players in the “D” class microfinance institution category in Nepal. The combination of Grameen Bikas Laghubitta’s robust paid-up capital and established regional presence (Headquarters in Butwal) with Samaj Laghubitta’s network (Headquarters in Sarlahi) promises enhanced synergy and a wider geographical footprint.
The primary objective of this merger, beyond fulfilling regulatory requirements, is to achieve operational efficiencies and economic scale. Investors will be keenly watching for improvements in key financial indicators such as Earnings Per Share (EPS), Return on Equity (ROE), and the overall Net Profit Margin (NPM), although prior research on microfinance mergers in Nepal has shown mixed financial performance results post-consolidation. A larger, more consolidated entity is expected to better manage credit risk, particularly multiple borrowing among clients, which has been a major challenge in the sector. The suspension is a temporary pause before the market re-evaluates the stock based on the strength and synergy of this new microfinance powerhouse.
For More: Share Trading Suspended Before Merger