Bids Opened for Auctioned Shares of Citizen Investment Trust (CIT); What is the Cut-off Rate?

The bids have been opened for the auctioned shares of Citizen Investment Trust (CIT). The company auctioned its 3,54,150.05 units of ordinary rights shares from 21st Falgun to 2nd Chaitra, 2077. Individuals, companies, and institutions were all eligible to bid for the auction.

Citizen Investment Trust (CIT) had recently allotted its right shares to applicants. The company had issued its 1:0.8284 ratio i.e., 1,35,92,592 units right share to its shareholders from Poush 28 till Magh 19, 2077. In the allotment, 12,640 investors were allotted a total of 1,32,38,378.95 shares. The remaining shares were then auctioned.

According to the auction manager RBB Merchant Banking, Rs. 3,504 is the tentative cut-off price for this auction. Note that the reconciliation is still going on and the final data may vary slightly. 

This auction received a total of 6,354 bids, of which 961 bidders have bid at or above the tentative cut-off rate. The highest bid price was Rs. 4,444 from a bidder who is an individual. Interestingly, the auction received bids at as low as Rs. 100 per share.

The auction manager might refund the money to non-allottees this week itself.

If the shares are auctioned away at an average price of Rs. 4,000 per share, CIT will earn Rs. 3,900 per share, given that the right shares were actually supposed to be given to existing shareholders at Rs. 100 per share. Thus, this auction will give the company an extra income of Rs. 1,38,11,85,195, if we assume that the shares will be auctioned away at an average price of Rs. 4,000 per share.

As of writing, CIT has an LTP of Rs. 4,510. CIT's shares have gained about 12% in the last three trading sessions (including today's 3.04% gain while writing this).