Sarbottam Cement Book Building Process: Tentative Cut-off Price of QII Stands Rs 401 Per Share, General Public IPO Price At Rs 360.9

The IPO of Sarbottam Cement has commenced its bid applications for Qualified Institutional Investors (QII) at the Nepal Stock Exchange (NEPSE), where bids were unveiled in the presence of NEPSE's CEO Krishna Bahadur Karki and Sarbottam Cement's Chairman Bishnu Prasad Neupane.

During the initial phase, the company offered its IPO to eligible institutional investors through the book-building process from Mangsir 6 to Mangsir 10. A total of 41 eligible institutional investors sought this opportunity, applying for 36,19,190 shares against the 24,00,000 units initially offered. In total there are 135 QII licensed by SEBON so far. 

Kumari Capital and two mutual funds under its operation submitted bids at the highest price, with Kumari Capital bidding for 5,000 shares, Kumari Equity Fund for 15,000 shares, and Kumari Dhanabriddhi Yojana for 20,000 shares, all at Rs. 406 per share, the most expensive bid. Citizen Investment Fund submitted a bid for 4,00,000 shares at Rs. 405. As per the book building guidelines a maximum of 20% shares could be bid by a single qualified investor of the total issue size i.e. 4,80,000 units in Sarbottam Cement case. In total there are four QII who have bid for 4.8 lakh units each which are Sky Touch Investment and Consultant Pvt. Ltd, Alka Investment Pvt. Ltd, Nepal Insurance Company Limited and City Express Investment Fund Pvt. Ltd. 

The majority of bids were placed at cut-off of Rs. 401 will get proportionate share out of applied and the available share i.e.(applied by QII*(shares available after deducting the shares to highest bidding QII/total no. of shares applied by QII at cut-off price).

Shares allotted to successful QII will be in lock in period for six months from the date of allottment to the general public. The cut-off price should stand at Rs. 401, and the shares for the general public will be available at Rs. 360.9 (10% discounted on cut-off rate)

Qualified institutional investors were permitted to apply within a specified price range of Rs. 401 to Rs. 601.50 per share, and those who had already submitted a target price were restricted from applying at a lower price than their stated target.

This resulted in some institutional investors refraining from applying due to changes in market conditions compared to the time of their initial price intentions.

The issued capital of the company stands at Rs. 4.65 Arba of which 12.9033% i.e. 60,00,000 unit shares will be issued to the public (Qualified Institution Investors (QIIs) and the general public). Out of this total issue, 40% i.e. 24,00,000 shares were issued to Qualified Institutional Investors.

An arrangement is in place to set a cut-off price for fully sold securities to qualified institutional investors, where applicants at or above the cut-off price will receive their share allotments as per demand. Shares will be issued to general investors at a 10 percent discount from the cut-off price.

Once shares are allotted to qualified institutional investors, the company will proceed to issue shares to the general public, managed by Global IME Capital.

Out of the total 6 million IPO shares prepared for issuance, 24 lakh shares (40 percent) were earmarked for qualified institutional investors. The remaining includes 8 lakh shares for local residents, 3 lakh shares for employees, and 25 lakh shares for the general public, following the book-building rule.

Sarbottam Cement initially applied for an IPO through the book-building method on 28th Ashadh 2079, gaining approval 15 months later, marking the pioneering IPO through this method.