Opportunity to grab shares of 8 companies in auction (and how much to bid in auction of Tourism Dev Bank)

- ShareSansar, June 16, 2017  on Exclusive , Featured , Latest , Share Auction , Stock Market

Many companies have been issuing right shares in order to hike paid up capital requirements. However, not all right shares are being subscribed by their existing shareholders and these unclaimed shares will be auctioned to the general public at Rs 100 and above. There are altogether 8 companies that have been auctioning right shares.

Looking at the earlier trend, it can be said that the cutoff will be near to the market price. Most probably the cut off price will be around 10-20% less than the last trading price of the auction closing day.

For instance, when Kumari Bank Limited auctioned its 2.80 lakh units unclaimed right shares, investors who had bid Rs 307 per share were able to grab the shares. The last trading price of Kumari shares, a day before the bid opening day stood at Rs. 330.

But, if the market is in bearish sentiment, then the investor might have the opportunity to grab shares at low price. For example, when Agricultural Bank Limited auctioned its 19.68 lakh units unclaimed right shares, investors who had bid Rs 361 per share were able to grab the shares. The market price on that day was around Rs 430. This means, investors can get the same number of shares at almost 20% less than the market price.

There is a trend that the bidders who bid around 80% to 95% of the last closing price generally fall under cutoff. However, since this is an auction, investors should try to bid as low as possible. Bidding around market price or more than the market price is never sensible. There is a huge chance that many investors will bid more than what is considered an optimal bid price.

Upcoming auctions in Ashad 2074 (June– July 2017)

S.NoSymbolCompany NameNo. of Ordinary Share 

No. of Promoter Shares

Opening DateClosing DateBid Opening DateIssue Manager
1GBBLGarima Bikas Bank336071.549847.12Ashad 18Ashad 23Ashad 24Ace Capital Limited
2CZBILCitizens Bank International Limited420,490199,313Ashad 15Ashad 20Ashad 21Sanima Capital Limited
3NLBBLNerude Laghubita Bikas Bank Limited14,75993,977Ashad 13Ashad 20Ashad 21Sunrise Capital Limited
4DDBLDeprosc Laghubitta Bikas Bank Limited15,970 –Ashad 04Ashad 11Ashad 13Nabil Investment Banking Limited
5TDBLTourism Development Bank Limited266,5374,388,201Ashad 07Ashad 15Ashad 16NIBL Capital Market
6NICA NIC Asia Bank Limited298,536 –Ashad 01Ashad 08Ashad 09NIC Asia Capital Limited
7PRIN Prabhu Insurance Company Limited42,7885,334Jestha 31Ashad 07Ashad 09Prabhu capital Limited
8BHBLBhargav Bikash Bank Limited52,76552,765Jestha 26Ashad 02Ashad 04NMB Capital Limited

Among 8 companies, BHBL, PRIN  and NICA have been auctioning their unsold right shares to its shareholders whereas other 5 companies have already published notice regarding auction but still few days are left for the opening.

In case of Tourism Development Bank, many investors want to know how much should they bid for this auction since its trading has been suspended in NEPSE due to its merger process with Mega Bank Nepal Limited (MEGA). Since, it had issued 100% right shares to its shareholders, the bidders must adjust the right share amount and then only should submit the bidding amount.

Accounting for right/bonus share

The last traded price of TDBL stands at Rs 427 per share before its trading was suspended in NEPSE. However, TDBL has already issued 100% right share after this. Accounting for this right, its market price will be adjusted to Rs 263.5. So, bidders should make this as the base price for auction.

Normal bid price is 10% to 20% less than the last closing price. So, Rs 210 to Rs 238 per share is a normal bid range for this auction of TDBL.

Note: Use ShareSansar’s Bonus Adjustment Calculator and Right Adjustment Calculator for similar stocks.

Bidders should never bid more than the market price. It is sensible to wait until the second last day of the auction, then bid 15-20% less than the final closing price. Bidding more than the market price only makes the company richer, not its shareholders.