Reliance Spinning Mills IPO Attracts High Demand from Institutional Investors

GP Chudal
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Reliance Spinning Mills application opened through book building method, what is the cutoff price?

Published: Jan 29, 2024
Reliance Spinning Mills, the largest spinning mill of Nepal, has received a strong response from institutional investors for its initial public offering (IPO) through the book building method. The company, which produces various types of yarns for domestic and international markets, is issuing 770,640 shares in the first phase of its IPO.

The company opened the bidding process for the qualified institutional investors on 10th of Magh, after getting the approval from the Securities Board of Nepal. The base price of the shares was fixed at Rs 760, with a price range of 20 percent above and below the base price, i.e., Rs 912 and Rs 608 respectively.

The institutional investors submitted their confidential bids to the Nepal Stock Exchange (NEPSE), indicating the number of shares and the price they were willing to pay. According to the company, most of the investors bid at the upper limit of the price range, i.e., Rs 912, reflecting the high demand and confidence in the company.

Out of the 64 institutional investors who participated in the bidding process, 18 of them bid at Rs 912. The company announced that the cut-off price of the shares will be Rs 912, based on the weighted average of the bids.

The company will issue the shares to the general public at a 10 percent discount on the cut-off price, i.e., Rs 821 per share. The company has appointed Global IME Capital as the issue manager for the IPO. The company plans to use the funds raised from the IPO to repay its loans and invest in other hydropower companies.

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