14th October 2025, Kathmandu
Sanima Bank Limited has strategically moved to put 339,484 units of its promoter shares up for auction to the general public, including individuals, companies, and institutions.
Sanima Bank Promoter Shares
This decision follows the initial offering failing to secure applications from existing promoter shareholders, creating a significant opportunity in the market. With a compelling minimum bid price of Rs. 145 per share, this auction presents a fascinating case study in the dynamics of the Nepalese stock market and the inherent value proposition of a well-established commercial bank. Investors must submit their sealed bids within 15 days to the bank’s central office, with a substantial minimum application size of 50,000 shares. This article will thoroughly analyze the implications of this auction for both the bank and the broader market, comparing the auction price to the current market valuation of its ordinary shares.
Understanding the Dual-Class Share Structure and the Value Gap
In Nepal’s capital market, a dual-class share structure exists, where Promoter Shares and Ordinary Shares of the same company trade separately. Understanding the key differences is crucial for investors evaluating this auction:
Equal Rights, Unequal Liquidity: Both classes of shares typically carry equal rights regarding dividends, earnings claims, and voting rights. However, the critical difference lies in liquidity. Promoter shares are generally less liquid because they are subject to regulatory lock-in periods and trading restrictions. Buyers of promoter shares must often meet certain criteria, such as not being blacklisted by the Credit Information Bureau (CIB) and, in some cases, the share transfer process may be more restrictive.
The Price Discount: As a direct result of lower liquidity and regulatory constraints, promoter shares almost universally trade at a substantial discount to ordinary shares on the Nepal Stock Exchange (NEPSE). This discount is the primary driver of investor interest in share auctions like the one announced by Sanima Bank.
The Current Market Context: Sanima’s Ordinary Share Price
To properly evaluate the opportunity presented by the auction’s minimum bid price of Rs. 145, it is essential to look at the market value of Sanima Bank’s highly liquid ordinary shares .
As of October 13, 2025, the Last Traded Price (LTP) of Sanima Bank’s ordinary shares was approximately Rs. 318.20.
This creates a significant price differential that highlights the potential investment arbitrage:
- Auction Minimum Price (Promoter Share): Rs. 145.00
- Current Ordinary Share Price : Rs. 318.20
- Potential Discount: The minimum bid price is less than half (roughly 45.57%) of the current market price of the ordinary share.
This steep discount is standard in the Nepalese market and provides a strong incentive for institutional and high-net-worth individual investors who can meet the minimum application quantity of 50,000 shares.
Implications for Sanima Bank and its Share Price
The auction of 339,484 promoter shares has several key implications for Sanima Bank and the trading performance of its ordinary shares:
1. Impact on Supply and Price of Ordinary Shares
The most common fear among retail investors is that an influx of shares into the market will depress the price of ordinary shares. While the promoter shares themselves trade separately, two key factors mitigate a direct negative impact:
Small Quantity, High Barrier: The total quantity of 339,484 shares is relatively small compared to the bank’s total listed shares, which exceed 135 million units. Furthermore, the high minimum application quantity (50,000 units) effectively restricts the auction to institutional or sophisticated high-volume investors, preventing a sudden, widespread sell-off by small retail investors.
No Immediate Conversion Risk: For a commercial bank like Sanima, the conversion of promoter shares into ordinary shares is a regulated process requiring approval from the Nepal Rastra Bank (NRB) and can only occur after a stipulated lock-in period, often 10 years from the commencement of operation, while maintaining a 51% minimum promoter holding. This regulatory environment ensures that the auctioned shares will not immediately swell the supply of easily traded ordinary shares.
2. Financial Benefit to the Bank
The premium collected from the sale of these promoter shares (the difference between the Rs. 100 par value and the successful bid price) will be transferred to the bank’s reserve. This mechanism is crucial for increasing the bank’s total net worth and strengthening its financial position, which is a fundamental positive for the long-term intrinsic value of all its shares, both promoter and ordinary.
3. Investor Confidence and Perception
The need to sell shares after an internal offering failure could be viewed in two ways:
Opportunity Perception: The fact that the shares are now open to the public is viewed as a rare chance for new major investors to acquire a significant block of a stable, profitable commercial bank at a deep discount. Given Sanima Bank’s strong fundamentals—including a comfortable capitalization level, experienced management, and a focus on retail credit which helps shield its Net Interest Margins (NIMs) from rising costs—the auction will likely attract competitive bidding.
Promoter Commitment: The lack of interest from existing promoters is a minor concern, but this is often offset by the fact that the minimum promoter holding requirement of 51% is maintained, as the auction is only for excess shares. Sanima Bank’s current promoter holding is approximately 51%, indicating it is maintaining its regulatory obligations.
How to Participate in the Auction for Institutional Investors
Interested individuals and institutions must adhere to a strict process for sealed-bid auctions in the Nepalese market, as outlined by the bank’s announcement:
Determine the Brate resolutions and CIB reports may be mandatory.
- Fund Deposit: The total biid Price and Quantity: Applicants must bid at or above the minimum price of Rs. 145. Crucially, they must bid for a minimum of 50,000 shares.
- Document Preparation: The application must include all required documents, such as a copy of the Nepali citizenship, a photograph, and necessary account information (DEMAT and bank account details). For institutional buyers, corpod amount (bid price × number of shares applied for) must be deposited in the bank account specified by Sanima Bank or its designated issue manager. A voucher or ‘Good for Payment’ cheque must accompany the sealed bid.
- Submission: The sealed bid must be submitted to the bank’s central office within the 15-day application window.
- Allotment and Cut-Off: Shares are allotted starting with the highest bidder until the entire quantity is sold. The last successful bid price sets the ‘cut-off price.’ Bidders who apply at or above this cut-off price receive shares. Unsuccessful applicants will have their application funds refunded shortly after the allotment process.
Conclusion: A Strategic Acquisition Opportunity
The auction of Sanima Bank’s promoter shares is an important event that provides a key entry point for high-volume investors to capitalize on the enduring value gap between promoter and ordinary shares. With the ordinary shares of Sanima trading at over double the minimum bid price, the promoter shares offer an attractive acquisition price for a long-term holding in a high-quality, well-managed commercial bank. The relatively small volume and high minimum application requirement mean the impact on the daily trading price of the public share will likely be negligible, securing a long-term strategic advantage for the successful bidders while strengthening the bank’s financial reserves.
For More: Sanima Bank Promoter Shares