Looking at the live auction portal of RSEBL, the price bid may go up to more than Nu 200
The Royal Securities Exchange of Bhutan Limited (RSEBL) is auctioning the offer for sale of shares of the Sungchob Fund and Kidu Fund.
The listed companies are the Royal Insurance Corporation of Bhutan Limited (RICBL) and the Bhutan National Bank Limited (BNBL).
The proceeds from the sale of shares will be used for replenishing the reserve for the National Resilience Fund (NRF) for continuing income and interest payment support under the Druk Gyalpo’s Relief Kidu (DGRK).
The RICBL has 15.640mn shares offering the floor price at Nu 70 per share and the BNBL has 17.620mn shares offering the floor price at Nu 33 per share.
The floor price is the minimum price set for the offer at and above which the investors can place their bids/orders. The final price for the offer will be determined through the RSEBL’s volume based matching process.
The policy head of RSEBL, Dawa Dakpa said in order to replenish the NRF, these two organizations have decided to offload their shares in the market.
He said because of the huge volume of shares coming to the market and that it may distort the secondary market, the trading of these two listed companies’ securities in the secondary market is being suspended in order to avoid price manipulation in the secondary market.
“So we are selling the Kidu and Sungchob Funds’ shares in the open auction method,” he said.
He said that the final price will be discovered at the price where the total bid equals available shares for auctions.
Meanwhile, price discovery is based on the volume. The price where the cumulative volume meets the offer for sale volume will be the eligible price for transaction. The allocation of the offer will be based on an equal allocation method with time priority. No allocation will be made below the final price.
Dawa Dakpa said that the excess amount will be refunded to individuals and those who didn’t qualify for the auction will be also refunded.
The prices of the two listed companies are different because prices were determined as per the prevailing market prices, according to Dawa Dakpa.
He said that the RSEBL is receiving an average of 400 calls daily inquiring and there are people’s sentiments where some investors want to offer the best prices since it is for the Kidu fund. An individual has to buy a minimum of 10 shares and there are no limits on the maximum shares that they want to buy.
He added that if an individual wants to change the bid price and bid volume they can change in the system. However, the minimum price that they can change can be only 50 chhertum.
He also mentioned that the duration for auction is kept for one month from June 15 to July 15 because the objective is to have broad-based ownership of shareholders across the country.
Bhutanese citizens, firms, trust funds, corporate bodies, associations are eligible to subscribe to the shares. All eligible investors can participate by placing their bids or orders through the RSEBL’s online system, securities brokerage firms, community centers operated by the National CSI Development Bank, branch office BoBL, BNBL, BDBL, RICBL and the Bhutan Post.
The brokers are trained by RSEBL and licensed by the central bank.
As of Friday 6pm, the highest price bid for RICBL was Nu 200 and the BNBL was also Nu 200.