Capital market ready to welcome five new cos
Three banks, two insurers plan to raise Tk 76cr through IPOs
M Abdur Rahim
The capital market is ready to welcome five new companies, three banks and two insurers, which will raise Tk 76.26 crore through initial public offerings (IPOs).The Securities and Exchange Commission (SEC) which has examined the prospectus of these companies is likely to give them the go-ahead to open subscriptions soon. Exim Bank applied to raise Tk 40.80 crore with Tk 30 premium per share from public through IPO, Premier Bank Tk 27.26 crore, First Security Bank Tk 3.20 crore, Mercantile Insurance Tk 4 crore and Meghna Life Insurance Company Tk 1 crore, sources said. Three more companies-- Industrial Promotion and Development Company of Bangladesh Ltd (IPDC), Fareast Islami Insurance and Progressive Insurance -- have also applied to the SEC to go public but the regulators are yet to examine their prospectus. Sources said permission to float IPO is being delayed as the market watchdog asked the companies to adjust the expansion proposals mentioned in their prospectus, in the changing scenario of trading settlement under the central depository system (CDS). "The dilemma over mandatory opening of beneficiary owners' (BO) account also delays permission of new IPOs," said an issue manager. On March 8, the SEC relaxed its rule on opening BO account before applying for shares through IPO subscription following demand from bourses and companies. Now the IPO applicants will have to open accounts with depository participants (DPs) only when they get share through allotment draw. Earlier, anybody applying for IPO shares had to mention his/her account number in the subscription form. Though SEC does not fix any rate, investors are to pay Tk 300 to Tk 500 for opening the BO account. SEC was not willing to take risk in the changing scenario of capital market after launching of the CDS which requires new IPO issuing companies to come under the electronic settlement system right from the beginning. Since introduction of CDS with shares of Square Pharmaceuticals on January 24, no companies got SEC permission to float IPOs. Sources said SEC is likely to permit a banking sector company among the companies applied to float IPOs to have good beginning with CDS. A total of 14 new IPOs were floated in 2003 and eight in 2002 and 11 in 2001.
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