Mohammad Mufazzal
IPO proposals coming from 19 public limited companies (PLCs) are now awaiting approval of the Bangladesh Securities and Exchange Commission (BSEC).
The PLCs seek to raise an aggregate amount of Tk 10.34 billion under both the book building and fixed price method.
These companies will float initial public offerings (IPOs) under the revised Public Issue Rules.
Among the PLCs, 10 companies have submitted IPO proposals by completing road shows to raise an aggregate amount of Tk 7.11 billion under the book building method.
On the other hand, nine companies have submitted proposals to raise capital worth Tk 3.23 billion under the fixed price method.
After the 2010-11 stock market debacle, the book building method had triggered controversy as the system was used as a conduit for price manipulation.
Khandakar Ibrahim Khaled-led probe body formed after 2010-11 stock market debacle recommended for amending the book building method.
On December 7, 2015, the BSEC approved the amendment of Public Issue Rules making the use of the book building method mandatory for the companies willing to offer their primary shares at a premium.
And only the companies interested to offer their stocks at face value are now allowed to float IPOs under the fixed price method, according to the latest amendments to public issue rules.
In the revised public issue rules, the securities regulator increased the number of disclosures and due-diligence on the part of issuing companies and issue managers.
Among the companies that intend to go public under book building method, Aamra Network will raise a capital worth above Tk 262.50 million, STS Holdings (Apollo Hospitals) Dhaka, Tk 300 million, Dhaka Regency Hotel and Resort Tk 600 million, Bashundhara Paper Mill Tk 2.0 billion, Aman Cotton Fibrous Tk 800 million, Runner Automobiles Tk 1.0 billion, Popular Pharmaceuticals Tk 700 million, Delta Hospital Tk 500 million, Bengal Poly and Paper Sack Tk 550 million and Index Agro Industries Tk 400 million.
Among the companies which have submitted IPO proposals under fixed price method, IfCO Garments & Textiles proposes to raise a fund worth Tk 200 million, Shepherd Industries Tk 200 million, Nurani Dyeing & Sweater Tk 430 million, Intraco Refueling Station Tk 200 million, Oimex Electrodes Tk 150 million, Amulet Pharmaceuticals Tk 150 million, BBS Cables Tk 200 million, Nahee Aluminum Composite Panel Tk 150 million and Indo-Bangla Pharmaceuticals Tk 200 million.
Former chairman of the securities' regulator Faruq Ahmad Siddiqi said the public issue rules was revised to ensure quality IPOs.
"Under the book building method, institutional investors have the scope of applying judgment about the companies' fundamental strength. The securities' regulator should approve these IPOs carefully," Mr. Siddiqi said. Siddiqi expressed his optimism that the market's depth would increase through the entry of quality IPOs.
Mohammad Saifur Rahman, a BSEC executive director and spokesperson, said the disclosure requirements were increased by amending public issue rules.
"Some issue managers told us that their issuer companies are unable to fulfill a few additional requirements. But requirements were increased for ensuring quality IPOs," Rahman said.
He said previously there were complaints about 'syndication' in the case of book building method. "We hope such allegation will not be made now," Rahman added. Some companies earlier submitted IPO proposals seeking premiums under the fixed price method.
The revised public issue rules came into effect before approving some of those proposals which sought premiums under the fixed price method.
As a result, the securities' regulator asked those companies to re-submit IPO proposals under the book building method by holding road shows.
The companies which were asked to redo IPO-launching method were Aftab Hatchery, AND Telecom, Karim Spinning, Madina Cement Industries, Summit Uttaranchol Power Company, Energypac Power Generation, Aman Cement Mills, Shamsul Alamin Real Estate, STS Holdings and Dhaka Regency Hotel.
Read More : Index Agro Industries holds IPO road show
According to BSEC officials, the regulatory approval to the IPO proposal of ACME Laboratories was the last one whose share distribution was completed under the revised book building method.
mufazzal.fe@gmail.com
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