How much to bid in Prudential, NLG and Shikhar Insurance auction share? Get an idea
The company issues the right shares to their existing shareholders in order to hike the paid-up capital requirements. However, investors might not fully subscribe to the right shares at a par value of Rs.100. Because of this reason, the company auctions the Right Shares at Rs. 100 or above to the general investors.
Many non-life insurance companies in the past have auctioned their right shares. Some of them are mentioned below with the closing price at the time of auction and the cut-off rate.
| S. N | Symbol | Company Name | Closing Price | Cut-off Price | Change |
|---|---|---|---|---|---|
| 1 | LGIL | Lumbini General Insurance Limited | 497 | 482 | -3.02% |
| 2 | UIC | United Insurance Company Limited | 221 | 180.8 | -18.19% |
| 3 | EIC | Everest Insurance Company Limited | 315 | 251 | -20.32% |
| 4 | NICL | Nepal Insurance Company Limited | 390 | 356 | -8.72% |
| 5 | IGI | IME General Insurance Limited | 418 | 361.5 | -13.52% |
| 6 | SIL | Siddhartha Insurance Limited | 660 | 616 | -6.67% |
| 7 | PRIN | Prabhu Insurance Company Limited | 484 | 451 | -6.82% |
| 8 | NICL | Nepal Insurance Company Limited | 390 | 153 | -60.77% |
| 9 | NIL | Neco Insurance Company Limited | 622 | 540 | -13.18% |
| 10 | PICL | Prudential Insurance Company Limited | 660 | 603 | -8.64% |
| 11 | HGI | Himalayan General Insurance Company Limited | 705 | 634 | -10.07% |
| 12 | LGIL | Lumbini General Insurance Limited | 926 | 756.77 | -18.28% |
| 13 | IGI | IME General Insurance Limited | 1274 | 1262 | -0.94% |
| 14 | SIL | Siddhartha Insurance Limited | 1638 | 1607.22 | -1.88% |
| 15 | PRIN | Prabhu Insurance Company Limited | 1040 | 980 | -5.77% |
| 16 | NIL | Neco Insurance Company Limited | 1155 | 1055 | -8.66% |
| Average | -12.84% |
We calculated the difference between the closing price and the cut-off rate in the time of auction and averaged the total change of all 16 companies. According to our calculation, the right shares were auctioned at average -12.84% lower than the closing price during the auction.
We can observe this data to decide what margin we can consider bidding for upcoming auctions.
List of Ongoing/Upcoming Auction:
|
S. N |
Company Name |
Issue Manager |
Total share unit (including Promoter) |
Open date |
Close date |
|---|---|---|---|---|---|
|
1 |
Prudential Insurance Company Limited |
NMB Capital Limited |
54,631 |
Shrawan-12, 2077 |
Shrawan-19, 2077 |
|
2 |
NLG Insurance Company Limited |
Laxmi Capital Market Limited |
161,078 |
Shrawan-22, 2077 |
Shrawan-29, 2077 |
|
3 |
Shikhar Insurance Company Limited |
NIBL Ace Capital Limited |
87,412 |
Shrawan-21, 2077 |
Shrawan-28, 2077 |
For instance, as of writing, Prudential Insurance is valued at Rs. 440 per share (Shrawan 18- recommended to bid price based on auction closing day market price) in the secondary market. Based on historical data, this means investors can bid at a price of around 12.84% lower than Rs. 440 i.e. Rs. 384 (Approx.) but this is not guaranteed price. The same process can be used for NLG and Shikhar Insurance auction.
It should be noted that the shares auctioned take time to be listed in the secondary market. Currently, NEPSE seems to be quite volatile and it might change its direction although it is in a rising trend. So, to be on the safe side, investors can plan ahead and bid for a higher margin than the historical average (i.e. lower price).
Disclaimer: The highest bid is considered in an auction. We only analyzed past data and it goes without saying that this auction is unique in itself and unpredictable. Please consider your risk appetite and bid accordingly.
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