PAC seeks clarification from Sebon on Reliance Spinning Mills IPO pricing

Himal Press 09 Jul 2024
PAC seeks clarification from Sebon on Reliance Spinning Mills IPO pricing

KATHMANDU: The Public Accounts Committee (PAC) of the House of Representatives has sought clarification from the Securities Board of Nepal (Sebon) regarding its decision to allow Reliance Spinning Mills (RSM) to launch an initial public offering (IPO).

RSM is launching its public offering for foreign Nepali migrants from Thursday. The company’s shares, with a face value of Rs 100, have been priced at Rs 820.9 through book building for the IPO.

Book building is the process through which issue managers determine the price at which IPO shares will be offered. The issue manager invites institutional investors to submit their bids, specifying the number of shares and the price they are willing to pay. The price of the securities is calculated using a weighted average of quotes by institutional investors.

The PAC has asked Sebon to furnish clarification within seven days on how the price of the shares was determined. It has also asked Sebon to ensure that the company has not manipulated its financial statements to elevate the share price. Likewise, the House panel has also sought clarification from Sebon on the discrepancy between the projected and actual earnings per share of the company.

While the RSM had projected earnings per share (EPS) of Rs 54.34 for 2022/23, the actual EPS was only Rs 2.8.

RSM earlier issued 770,640 units of primary shares to institutional investors in the last week of January. It is in the process of launching an IPO to issue 1,155,960 units of shares to the general public. Ten percent of these shares will be issued to Nepali migrant workers.

Published On: 09 Jul 2024


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