December 22: In today's fast-paced globalized business world, most organizations are struggling to stay afloat and keep up with their competitors. Businesses and organizations must constantly change and transform in order to remain competitive and relevant in today's complex and changing global environment. To deal with the complexities of the business world, corporate advisory and consulting service came into existence.
In the context of Nepal, institutions registered under the prevailing laws have been providing corporate advisory services. But now with regulatory reforms, SEBON has opened doors for corporate advisory service by providing license to eligible merchant bankers for providing corporate advisory services. This indeed has added merchant bankers’ business avenues. In the earlier stages, majority of the merchant bankers were focused in providing mainly RTA/RTS and issue management services. Recently, advisory services have become a major domain of work for merchant bankers.
Merchant bankers being the main connecting link between capital market and corporate world, advisory service has added more scope of work to merchant bankers to facilitate corporate world in corporate issues and bringing them to capital market in terms of capital funding, merger and acquisition, financial projection, valuations, escrow agency, loan syndication, capital structuring and making IPO compliant to tap the capital market by floating shares to public.
Besides that, corporate advisory service has been facilitating the companies in capital funding who have been refrained from financial access due to lack of collateral, debt equity ratio mismatch and unjustifiable financial statement due to the nature of business. In initial days, corporate advisory used to connect investors to investee for filling these funding gaps, but now with introduction of Specialized Investment Fund Regulations 2075, SEBON has opened doors for private equity funds as a new financing source for prospective business that are restricted to financial access due to regulatory restrictions. In this regard, NIBL Ace Capital has obtained Specialized Investment Fund Manager License from SEBON and is in process of registering PE fund – probably the largest licensed PE fund from SEBON for financing the projects that have limited financial access and have potential of contributing to the growth of economy.
Specialized Investment Fund Manager License has not only opened doors for prospective investee companies but also to the prospective investors who are seeking to make investment in unlisted companies and prospective projects where detailed investment analysis is required in pre investment phase and efficient portfolio management in post investment phase with proper exit strategy. This has created a one stop solution to the investee side where they can avail consultancy to investment service and deal assessment to fund management service on the investors’ side.
In a nutshell, the business dynamics are no longer limited to IPO-related merchant banking services, but the services have widened from consultancy to investment funding to the institutions project assessment to project management.