The Cut-Off Price For Sarbottam Cement Has Been Set At Rs 501; What Is The Minimum and Maximum Issue Price?

The cut-off price has been set at Rs. 501 per share for the Sarbottam Cement Limited (SCML) shares that will be issued using the book-building method.

Earlier SCML gave notice that the company is going to issue 60 lakh shares through book building method* with the participation of QIB on the initial statement as per section 7(1) of the book-building directive, 2077.

*Book Building Method is an alternative method of offering shares to the general public. In contrary to the Par value method of offering the Initial Public Offering (IPO), the Book value method tries to find the true price of the company and tries to efficiently price that company. In simple terms, the book-building method is a process of price discovery for a company.

On Friday, the Nepal Stock Exchange (NEPSE) began the auction for the intended price that the company was requesting. A cut-off price of Rs. 501 has been established as a result.

65 institutional investors (QIIs) had submitted applications for Sarbottam Cement's share price. 24 lakh shares (40% of total IPO issue Units) have been set aside by the company for institutional investors. The company will now submit an application based on the same pricing to the Securities Board of Nepal (SEBON).

According to the book-building method, the company will fix the base price by adding 25 percent to the cut-off price. Thus, the base price of the share will be Rs. 626.25. In addition, the company will be able to sell an additional 20 percent of the base price at Rs 751.5 per share (maximum issue price). Also, the company could sell 20 percent less than the base price i.e Rs. 501 for the QIIs, which shall be the minimum issue price.

However, general investors will get shares at price lower than the cutoff.