BIL shares bought off and some
Equitable allotment to address oversubscription problem
7 October, 2009 – Shares of the Bhutan insurance limited (BIL) have been oversubscribed by 55 percent, making it the first public limited company to receive such a response from investors in the past three years.
BIL had floated 600,000 shares worth Nu 100 a share as a primary offer to raise Nu 60 million or 60 percent of the company’s paid up capital. When the offer closed a month later on September 18, 4,432 investors had made orders for 931,073 shares worth about Nu 93m.
“That’s is about 55 percent more than what was supposed to be raised,” said the manager of the royal securities exchange of Bhutan (RSEB), Dophu Dorji. “The excess money will have to be refunded within 45 days from the date of allotment.”
Dophu Dorji said that, because of oversubscription, allotment would be done on an equitable basis, whereby the smaller shareholders are protected or given first preference. The upper limit for allotment is a maximum of around 700 shares. “Those, who have applied for fewer than 700 shares, should get what they applied for,” he said.
This may not be good news for investors, who applied for 10,000 shares worth Nu 1m, the largest single buyers for BIL’s offer. At least 15 people had applied for 10,000 shares each, according to RSEB officials. There were a few institutional investors as well.
Investors from the Thimphu region were the maximum, with investors applying for 730,000 shares worth Nu 73m. “Thimphu has the highest number of investors in volume and in applications, but one must consider that people of the 20 dzongkhags are in Thimphu,” said Dophu Dorji. Otherwise, in terms of investors from the dzongkhags, Trashiyangste had the maximum and Bumthang had the least.
On the overwhelming response to BIL’s float, Dophu Dorji said, “In my personal opinion, I think people have more faith in investing in financial institutions, because it is highly regulated and monitored by the government.” It was also an indication that people had money to invest.
Druk Wang alloys, a manufacturing company in Pasakha, made a primary offer in 2007, but the response from the public was very poor. Likewise in 2006, Jigme mining and Kuensel corporation limited had to take several extensions to get investors.
The allotment of BIL shares will be done on Thursday, October 8. BIL will also have to apply to be listed on the stock exchange and will be the 21st company to be listed.
Source: Kuenselonline