As per the record with Royal Securities Exchange of Bhutan (RSEB), as of 27 September (last date for a subscription of share), Sherza Ventures Limited (SVL) could raise a total amount of Nu 64.34 mn.
The total number of shares subscribed is 4.94 mn and the total number of subscribers is 5,923. The amount is just 15 percent of the subscription amount showing that it has been a failure at meeting its ambitious target.
The share subscribers include people who have invested Nu 60,000 to Nu 70,000 on the higher side.
SVL said the final figure is subjected to some change as they are still reconciling the figures.
During the initial launch of Initial Public Offering (IPO), SVL invited people to invest in shares and raise Nu 247 mn. In addition, Nu 19 mn equity shares were made available at Nu 13 per share to attract even micro investors.
The offering was launched on 27 August 2019 amid much media blitz in the media and social media with repeated broadcast and print advertisements.
However, in hindsight the lack of details and a business model that hinged in part on subscribers becoming shop customers seems to have not taken off with the public.
CEO of SVL, Jurmay Chophel said that they tried to reach the advertisement of share to the masses. He claimed the reach of the shares could be reached only within the social media users and they could not reach it at a larger scale.
He claimed if the shares were brought at mass, the benefit would have gone to each and every corner. He alleged that there are people who are against the initiative and people in the far flung places think it’s a scam.
“However, we are happy with the response from people who have come to buy the shares. Our business plan is to grow from Thimphu and we will try to grow with the customers,” he added.
He said that basically they would start from basic Fast Moving Consumer Goods (FMCG) and build the business through customer services whereby they would encourage customers to buy from them.
FMCG is non-durable household goods such as packaged foods, beverages, toiletries, over-the-counter drugs, and other consumables.
He said the past they were a trading company and they have done logistic work and they only have one and a half year of experience in FMCG. He said SVL is doing a conventional way of trading but they are different from other conventional ones who have more experience in FMCG based on two grounds.
He said, “Keeping conventional way as it is, we are also trying to get into online e-commerce. We are combination of both retailer and wholesaler and we have the maximum experience. The second ground being that we have the data to prove that IT can give us a huge advantage in managing and scaling up the business.”
“If they do not want to use IT at today’s size, there will be a huge challenge, in terms of management and in terms of staff management and in terms of making the date of expiry,” he said, adding that those can be addressed using the latest inventory management technology.
In addition, he said, “There are few products that can be substituted with imported products. For instance, we have 4,000 shareholders for now and in the span of next few years if we can grow up to 50,000 shareholders then there is a room where we can talk with the cooperative farming produce and substituting every farming produce.”
That is how they are planning to grow and they will keep a record of everything so that it would be easy for them to keep track of fast consuming products to substitute. The quality can be improved at times and if they can get far they can then look for a market to exportto, he said.
He said, “We need not have to do any study in specific because there are lots of auctions happening around whereby we can talk and buy from farmers. I feel that it would definitely work if we pay them well. There will be authenticity to it.”
Meanwhile, he said that when it comes to shares and investment, it has its own risk whereby a person has to know and study the prospectus before buying any share.
“FMCG are tried, tested and a less risky business,” he said. “Customers would see the convenience, price, availability of goods and customers service in one place. We have decided to give all the services in one place and therefore I personally feel that this is one full proof business,” he added.
He also said that their customers should buy from them as they will be given at a cheaper price. “We will keep our shareholders informed about the health of the company,” he added.
However, if anything unexpected happens there are an assets and properties in the name of the company and it will be dealt as per the procedure of dissolving of a company. “Everything will be shared among the investors but they have to take risk,” he added.
Dorji Phuntsho, CEO of RSEB said that they have studied the company well and the criteria is fulfilled, however, they cannot assure that it is going to do well. RSEB will keep track of the financials and ask SVL to disclose all the information with them. In addition, RSEB will prescribe the governance standards.
“It is risky; in a way that investing equity is like investing in your own business. One has to take risk while buying shares. If it goes well one will get rewarded but if it fails then it is one’s ownership and how one can claim that. Therefore, it is mandated to go through the documents,” he added.
The role of RSEB is to list the companies and provide them the platform for secondary market. However, “We cannot guarantee anything. We can only ensure that whatever has been carried out as a business will be transparent and shareholders will be involved and informed,” he said.
For any IPO, people wait for the last moment and more so this year, they are doing an IPO almost after 5 years and that to a company that are not known for it promoters and investors. “It in a way becomes little difficult and challenging to penetrate. We have to encourage people and that can be done through financial literacy,” he added.