Kathmandu. The merger agreement has been signed between the two listed microfinance financial institutions at a time when the process of merger and acquisition is underway. A preliminary agreement has been signed between First Microfinance Laghubitta Bittiya Sanstha Limited and Mahila Laghubitta Bittiya Sanstha Limited.

The two organizations signed a preliminary memorandum of understanding (MoU) on Friday, August 9. With the agreement, the two organizations will move forward the process of integrated transactions.

Both First Microfinance and Mahila Laghubitta are listed on the Nepal Stock Exchange (NEPSE). The merged entity is expected to have an increased paid-up capital and business size and further strengthen its financial base.

First Microfinance, which has its head office in Gyaneshwor, Kathmandu, has a paid-up capital of Rs 1.34 billion. Similarly, Mahila Laghubitta, which has its central office in Banepa, Kavrepalanchowk, has a paid-up capital of Rs 21.75 crore.

It is believed that the capital base of the organization formed after the merger will be strengthened and the scope of work will be expanded. It is expected that the merger of business, branch network and customer base of the two organizations will help expand services in a more effective way.

However, the swap ratio (share matching ratio) to be maintained after the merger has not been decided yet. The swap ratio will be determined only after a detailed due diligence audit of both the institutions and valuation of the assets.

The merged transaction of both the companies will proceed only after completing the necessary regulatory approvals and other processes during the merger process.