The Royal Securities Exchange of Bhutan (RSEB) announced the mass sale of 15,640,000 shares of RICBL at a floor price of Nu 70, and 17,620,000 shares of BNB at a floor price of Nu 33 between June 15 and July 15. The shares were held in the name of Sungchob Fund and Kidu Funds of His Majesty The King.
During the auction, some people have quoted till Nu 200, exceeding the floor price.
The sale of shares was done to replenish the reserve for the National Resilience Fund (NRF) for continuing income and interest payment support under the Druk Gyalpo’s Relief Kidu (DGRK).
Preempting the high chance of distortion in the secondary market, due to the huge volume of shares coming to the market, the trading of the two listed companies’ securities in the secondary market were suspended, in order to avoid price manipulation in the secondary market.
The price discovery was based on the volume. The price where the cumulative volume meets the offer for sale volume will be the eligible price for transaction. The allocation of the offer will be based on an equal allocation method with time priority.
All eligible investors were allowed to participate by placing their bids or orders through the RSEBL’s online system, securities brokerage firms, community centers operated by the National CSI Development Bank, branch office BoBL, BNBL, BDBL, RICBL and the Bhutan Post.
It was said the brokers were trained by RSEBL and licensed by the Central Bank.
A Financial Analyst, RSEBL, Sonam Phuntsho Lhagyel, said that the open auction of shares for a month was made to give the opportunity to all the citizens of 20 dzongkhags.
“To look from two point of views, the issuers and investor; for BNBL the offered volume was 35.24 million but the number of subscribed percentage is 204.0 percentage so for the issuers point of view which is Kidu and Sungchob, they are very happy. Suppose if one has put Nu 30,000 to buy the shares, he will not get Nu 30,000 worth of shares, but little less than Nu 30,000 since it is over subscribed,” he added.
Against the 35,240,867 BNB shares that were available there were 71,918,036 shares bid. In the case of RICBL against the 15,640,000 shares available there were 25,474,615 shares bid.
With the price discovered being Nu 33 for 35,240,867 shares the collection will be around Nu 1.162 bn. In the case of RICBL it is 1.094 bn. This comes to a total of around Nu 2.256 bn for the Sungchob Fund and Kidu Funds that will all go back to the people from His Majesty to help them during the pandemic.
On 16 July, RSEBL announced that the suspension of trade of BNBL and RICBL shares has been lifted, and the shares can now be traded in the secondary market.
A shareowner can always sell the shares if faced with any financial crisis. The sale of shares to convert into cash is known as the secondary market.
The benefit of shares is not only dividends which come as income but also possible bonus shares, buy back of shares and the value of the shares appreciating with time.
RSEBL has received enormous number of calls inquiring and some people wanted to offer the best prices since it is for the Kidu Fund.
The allocation for the auction will be done on 26 July due to the time consumed while allocating the shares.