Global IME's share auction closing today: What is the right price to bid?

ShareSansar, August 3:

Today is the last day to bid for Global IME Bank Limited’s  Follow on Public Offer (FPO) of 3,49,594 unit shares through auction the commercial bank has called to maintain the mandatory public share holding of 30 percent.

Though bidders must quote more than Rs 153 per unit share, which means that the lowest bid amount must be Rs 154, the real question is what is the right price to bid for the scrip?

While the share auction may be a good opportunity to get hold of the ordinary share at an attractive price, it may not be very helpful to ordinary retail investors, say market experts.

“Going by similar tenders issued by big listed companies over the recent months, the trend suggests that only those who bid for bulk stock at a price that are close to – and at times higher than – prevailing market price of the scrip win the auction.
Hence, I think bidders must bid something close to the market price of GBIME stock,” says Chairman of the Investors’ Forum Rajkumar Timilsina.

The GBIME stock hovers around Rs 700.

A big investor, who usually specializes in share auction, says that those bidding below Rs 600 are4 very unlikely to clinch the auctioned shares.

“I think something in between Rs 650 to Rs 700 should be the amount to be bid,” adds he. “But then it does not make much sense to ordinary investors.”

A stock analyst and investor Uddhav Siwakoti believes that since many big investors have big stakes in the bank, they might bid at prices even higher than the prevailing market price of the scrip.

“On top of that there are many big players for this stock in the market, which also makes it difficult for those who are hoping to get hold of the scrip through the auction,” he further says, hinting that the auction may not be a very good opportunity for small retail investors.

All of these experts conclude that interested bidders should apply in between Rs 600 to Rs 700 if they want to stand a chance to grab GBIME stock through this auction.
Before bidding for the auction, bidders must also realize is that they may or may not be entitled to the dividend for the last fiscal year.

This is because the share auction has been announced in the new fiscal year and also because the shares being floated in the auction are not the listed ones.

It may also be noted that bidders must also bid for a minimum of 100 units, and the entire bid amount must be deposited.

Global IME Capital Limited is managing the auction.