NIFL eyes options to increase liquidity or not

On the back of illiquid LOLC Development Finance PLC’s (NIFL) unprecedented share hike triggering Securities and Exchange Commission (SEC) intervention, the company is detailing plans to increase its liquidity or delist the share, sources close to the company said.

'Internal discussions are on in this regard,'' a source told the Business Times on Thursday.

The share saw an 11-day winning run on very thin volumes and value which saw the SEC calling information from NIFL prompting the company to issue a statement saying they are not aware of any material information on why there has been an unusual price movement of this share.

With a public free float of just 0.11 per cent held by 243 shareholders and LOLC Group controlling the rest, it gained over 25 percent in seven successive days.

The share climbed from Rs. 73.8 on June 14 to an intra-day high of Rs. 773.25 on June 30. NIFL is on the list of the top 10 market cap companies and surpassed the country’s largest private bank Commercial Bank with a market cap of Rs.107 billion.

NIFL traded in a wide range of Rs. 500- Rs. 690, but never traded above the previous close of Rs. 694.75.

The share saw a steep slide on Thursday by 5 percent to Rs. 524.5 after the company’s statement but remains the fourth market cap stock with Rs.125 billion market capitalisation.

In the event NIFL, a finance company (which by law should be listed) is to be delisted, the company will list a debt instrument such as debentures which is allowed, the source added.

Similarly, some other illiquid shares also saw increases this week which makes a strong case for the regulator to have stricter laws in enforcing the minimum capital float requirement. ''This will assist to stop manipulation,'' a stock market analyst said.