Reliance Spinning Mills Ltd. Receives Approval From SEBON for IPO Release Through Book Building Method

The Securities Exchange Board of Nepal (SEBON) has approved the IPO proposal of Reliance Spinning Mills Ltd. to issue shares through the book-building method. The proposal was submitted on Ashad 31, 2079 in SEBON, and received the green light after a hiatus of almost 18 months. Book building is the process by which an underwriter attempts to determine the price at which an initial public offering (IPO) will be offered. While 40% of the shares will be sold to Qualified Institutional Buyers (QIB), 60% will be issued to the general public.

The company has proposed to issue 19.26 lakh units out of which only 40% i.e. 7,70,640 shares will be issued to Qualified Institutional Investors and the remaining 60% i.e. 11,55,960 units are reserved for the general public.

As per the preliminary bid submitted by the QIB, the minimum price stood at Rs 608 per share. Based on this, the base price stood at Rs 760 per share. However, the company can issue shares up to 20% higher than the base price i.e. Rs 912 per share to the QIB. And whatever, the minimum cut-off rate by QIB would be, the general public will get a 10% discount price from the company.

In cases where investors bid above the base price but do not receive shares, there will be a three-day window to refund the excess amount with interest or make necessary account adjustments.

Global IME Capital has been appointed as the issue manager.

After Sarbottam Cement Limited, this will be the 2nd company to issue an IPO under book building method in Nepal. 

Reliance Spinning Mills Pvt. Ltd. was registered in the company registrar in the year 2051 B.S. With 4,300+ employees, Reliance Spinning Mills is the biggest of its kind in the country. The company manufactures Polyester, Viscous, and Acrylic yarn of international standard that is then exported worldwide, primarily to India and Turkey. The company has two manufacturing units located at Khanar, Sunsari, and Duhabi, Sunsari, Nepal. The total installed manufacturing capacity of the company is 40,680 MT per year as of mid-July 2021.