Alcid Investment… For the last two days, the stock of this one company has shocked the investors in the stock market. The reason for this is also clear, the stock of this company with share price of around Rs 3.53 reached above Rs 2.36 lakh in a single day. Along with this, it has also achieved the status of the most expensive stock in the country, beating MRF. But do you know that this has happened through ‘Special Call Auction’ of shares, so what is this method of buying and selling of shares?
First of all, let us tell you that Alcid Investment is a promoter group company of Asian Paints. This company holds 1.28 percent stake in Asian Paints, whose value is around Rs 4,000 crore. It is a non-banking finance company (NBFC) and the promoters of Asian Paints own 75 percent of its shares, and only 241 of its shares were traded during the ‘Special Call Auction’.
What is special call auction?
There are many listed companies in the Indian stock market, whose promoter group companies are also listed in the stock market, but their shares are not traded. Market regulator SEBI has developed a new method of trading to determine the correct value of shares of such investment companies or investment holding companies and to determine their correct market cap. This is called ‘Special Call Auction’.
Usually these companies are NBFC companies registered with the Reserve Bank of India. The holding company of Tata Group companies in India is ‘Tata Sons’. It has investments in all the companies of the Tata Group and about 66 percent of this company is held by ‘Tata Trusts’, which is owned by members of the Tata family. For a long time, RBI is in the process of listing this company in the stock market, so that the real value of Tata Group and family can be unlocked. Some similar work is done by Alcid Investment, the only difference is that it is already a company listed in the stock market.
What are the terms of the special call auction?
In India, listed companies in the stock exchange have to release 25 percent of their shares for public holdings. Company promoters can hold only 75 percent shares in any listed company. In such a situation, the system of ‘Special Call Auction’ which has been made for trading of shares of investment companies, has to follow certain conditions.
- There is no fixed price band for the shares of these companies, as a company decides during an IPO. Due to this, the true value of the shares of these companies is determined by the bids placed by the investors. This means that the limited shares of these companies can be bought or sold at any price.
- If the auction of shares of these companies is not successful on the first day, then bids can be made for several days until the investors of the company get its fair price.
- The number of buyers and sellers for the auction of such stocks is fixed. Not more than a limited number of people can bid for it.
- If the price discovery of shares of such a company is fixed on one stock exchange, then the same value can be used for trading on another exchange.
- Usually, the auction of shares of such companies is also limited and often it is done only once in a year. That means shares of these companies are traded only on one day in a year.
What happened to Alcide Investment’s stock?
The share of Alcid Investment remained around Rs 3 since 2011. According to its stake in Asian Paints, the value of its shares was believed to be Rs 5.85 lakh, but this was not its fair market price. The shareholders of the company did not want to sell it at a low value. But then SEBI ordered the company to discover the true value of its shares through a special call auction.
BSE and NSE invited bids for Alcide shares under special call auction session. After this the value of its shares was fixed at around Rs 2.36 lakh. In this way, the share price of the company rose by 67,00,000% in a single day.
