Reliance Spinning Mills IPO Allotted to Lucky 18,495 Applicants

Reliance Spinning Mills Limited has officially concluded the allotment of its Initial Public Offering (IPO) issued for the general public. The allotment process was completed today through a lottery system due to overwhelming investor demand. The issued capital of Reliance Spinning Mills stands at Rs. 1.90 Arba.

The company had floated a total of 924,768 ordinary shares to the public at a rate of Rs. 820.80 per share from Poush 7 to Poush 11. The public issue witnessed overwhelming investor interest, receiving applications from 532,888 applicants seeking a total of 27,215,100 shares, far exceeding the number of shares on offer.

Out of the total applications received, 519,046 applications were approved, while 13,842 applications were rejected due to technical and documentation-related reasons.

As the issue was highly oversubscribed, the share allotment was conducted through a lottery system in accordance with regulatory guidelines. Under this process, 18,495 applicants were allotted 50 shares each. Following the initial distribution, 18 remaining shares were further allotted on a one-share basis to 18 lucky applicants, allowing them to receive 51 shares each.

In the Reliance Spinning issue, which was oversubscribed by 29.42 times, only 1 out of 28 applicants was lucky enough to be allotted shares, leaving the rest empty-handed.

Earlier, following regulatory guidelines, the company issued its primary shares through the book-building process to Qualified Institutional Investors (QIIs) from 10th Magh to 14th Magh, 2080, with the allotment completed on 15th Magh, 2080.

In total, Reliance Spinning Mills raised 10.14% of its issued capital, equivalent to 19,26,600 shares. Of these, 40% (7,70,640 shares) were allotted to QIIs, while the remaining 60% (11,55,960 shares) were reserved for the general public. Out of the public portion, 10% (1,15,596 shares) were allocated for Nepalese citizens working abroad, leaving 10,40,364 shares for the general public, issued from 7th Poush to 11th Poush, 2082.

Of the general public issue, 5%, i.e., 57,798 units, were already allotted for the company's employees, and 5% of the total offered shares, i.e.,57,798 units, were already allotted for the mutual funds.

The share price for common investors is set at Rs. 820.80 per share, as the IPO is being conducted via the book-building method. Typically, the cut-off price determines the reference for book-built IPOs. During the primary allotment to QIIs, the cut-off price for Reliance Spinning Mills was Rs. 912 per share. Following guidelines, shares offered to the general public are priced 10% below the cut-off, resulting in Rs. 820.80 per share for ordinary investors.

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

CARE Ratings Nepal Limited (CRNL) has continued to keep Reliance Spinning Mills Limited (RSML) under credit watch with developing implications. The company’s issuer rating of CARE-NP A- (Is), indicating adequate safety and low credit risk, remains unchanged. Similarly, CRNL has also maintained the same credit watch status for RSML’s long-term rating (CARE-NP A-) and short-term rating (CARE-NP A2+) for its bank facilities.

Reliance Spinning Mills Pvt. Ltd. was registered with 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.