Nine listed cos raise more than Tk 19.80b through rights
Babul Barman
A total of nine listed companies raised more than Tk 19.80 billion, including premium, in the outgoing year from the stock market through right shares.
The figure shows a whopping 998 per cent growth compared to previous year.
According to statistics from the Dhaka Stock Exchange (DSE), nine companies issued over 775.31 million rights shares and raised the said amount. In 2013, only six companies raised Tk 1.80 billion through issuing 155.15 million rights shares.
A rights issue is an issue of additional shares by a listed company to raise capital from existing shareholders. With the rights, the existing shareholders have the privilege to buy a specified number of new shares from the firm at a particular price within a specified time.
Out of the nine companies, Aramit Cement raised Tk 254.10 million, including premium through 16.94 million right shares, Generation Next Fashions around Tk 1.13 billion issuing 113 million right shares, Rupali Life Insurance Tk 360.25 million, including premium through 12 million rights shares, BRAC Bank Tk 4.33 billion, including premium through 221.65 million rights shares, Delta Spinners Tk 91.73 million through 9.17 million rights shares, Midas Financing Tk 601.34 million issuing 60.13 million rights shares, BIFC Tk 335.60 million through 33.56 million shares, ICB (Investment Corporation of Bangladesh) Tk 10.55 billion, including premium through 21.09 million rights shares and First Security Islami Bank Tk 2.06 billion through 205.72 million rights shares.
Among them, four - Aramit Cement, Rupali Life Insurance, BRAC Bank and ICB-- took premium. Aramit Cement took Tk 5 premium, Rupali Life Insurance Tk 20 premium, BRAC Bank Tk 10 premium against ten taka share and ICB Tk 400 premium per share against Tk 100 face value.
Of the total Tk 19.80 billion, the state-owned ICB, however, raised more than half of the funds through right shares. The ICB issued one right shares against two existing shares (1R:2) at an offer price of Tk 500, including a premium of Tk 400 for each Tk 100 share and raised Tk 10.55 billion through 21.09 million rights shares.
The ICB invested the fund in primary and secondary market along with the repayment of the loans, according to the regulatory approval statement on August 12, this year.
"The tendency of capital raising through right offer and IPO increases when the market passes a bullish trend. Right shares issue rose this year compared to previous year as the performance of the secondary market was relatively good," said Akter H Sannamat, managing director of Union Capital.
"A listed company applies for issuing rights shares to further expand, repay loans or increase company's growth," said Mr Sannamat, also vice-president of Bangladesh Merchant Bankers' Association (BMBA).
However, he said: "If a company fundamental is good, it can be permitted even with premium. But if the fundamentals are weak, it should not be allowed even with the face value."
The Bangladesh Bank (BB) also asked non-banking financial institutions (NBFIs) to double their paid-up capital to Tk 1.0 billion to help consolidate capital base and also for minimising risks.
The securities regulator - Bangladesh Securities and Exchange Commission (BSEC)--revised the rights issue rules in November of 2011 to make it more transparent as issuance of rights shares was identified as a way of manipulation and price inflation by a government probe committee on the stock market scam.
"A listed company must have profitability records for three preceding years and a credit rating if it wants to offer rights shares with premium," said one of the new rules.
babulfexpress@gmail.com
Babul Barman
A total of nine listed companies raised more than Tk 19.80 billion, including premium, in the outgoing year from the stock market through right shares.
The figure shows a whopping 998 per cent growth compared to previous year.
According to statistics from the Dhaka Stock Exchange (DSE), nine companies issued over 775.31 million rights shares and raised the said amount. In 2013, only six companies raised Tk 1.80 billion through issuing 155.15 million rights shares.
A rights issue is an issue of additional shares by a listed company to raise capital from existing shareholders. With the rights, the existing shareholders have the privilege to buy a specified number of new shares from the firm at a particular price within a specified time.
Out of the nine companies, Aramit Cement raised Tk 254.10 million, including premium through 16.94 million right shares, Generation Next Fashions around Tk 1.13 billion issuing 113 million right shares, Rupali Life Insurance Tk 360.25 million, including premium through 12 million rights shares, BRAC Bank Tk 4.33 billion, including premium through 221.65 million rights shares, Delta Spinners Tk 91.73 million through 9.17 million rights shares, Midas Financing Tk 601.34 million issuing 60.13 million rights shares, BIFC Tk 335.60 million through 33.56 million shares, ICB (Investment Corporation of Bangladesh) Tk 10.55 billion, including premium through 21.09 million rights shares and First Security Islami Bank Tk 2.06 billion through 205.72 million rights shares.
Among them, four - Aramit Cement, Rupali Life Insurance, BRAC Bank and ICB-- took premium. Aramit Cement took Tk 5 premium, Rupali Life Insurance Tk 20 premium, BRAC Bank Tk 10 premium against ten taka share and ICB Tk 400 premium per share against Tk 100 face value.
Of the total Tk 19.80 billion, the state-owned ICB, however, raised more than half of the funds through right shares. The ICB issued one right shares against two existing shares (1R:2) at an offer price of Tk 500, including a premium of Tk 400 for each Tk 100 share and raised Tk 10.55 billion through 21.09 million rights shares.
The ICB invested the fund in primary and secondary market along with the repayment of the loans, according to the regulatory approval statement on August 12, this year.
"The tendency of capital raising through right offer and IPO increases when the market passes a bullish trend. Right shares issue rose this year compared to previous year as the performance of the secondary market was relatively good," said Akter H Sannamat, managing director of Union Capital.
"A listed company applies for issuing rights shares to further expand, repay loans or increase company's growth," said Mr Sannamat, also vice-president of Bangladesh Merchant Bankers' Association (BMBA).
However, he said: "If a company fundamental is good, it can be permitted even with premium. But if the fundamentals are weak, it should not be allowed even with the face value."
The Bangladesh Bank (BB) also asked non-banking financial institutions (NBFIs) to double their paid-up capital to Tk 1.0 billion to help consolidate capital base and also for minimising risks.
The securities regulator - Bangladesh Securities and Exchange Commission (BSEC)--revised the rights issue rules in November of 2011 to make it more transparent as issuance of rights shares was identified as a way of manipulation and price inflation by a government probe committee on the stock market scam.
"A listed company must have profitability records for three preceding years and a credit rating if it wants to offer rights shares with premium," said one of the new rules.
babulfexpress@gmail.com
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