Two companies get nod for direct listing

The two firms -- Ocean Containers Ltd and Khulna Power Ltd -- got the permission at a meeting of the Securities and Exchange Commission, presided over by the commission's Chairman Ziaul Haque Khondker.

However, no more private companies will be allowed to list directly in line with the government's earlier decision.

The finance ministry at a meeting on November 5 last year decided that only state-run companies will be able to offload shares under the direct listing method.

But the companies applied for direct listing before the November 5 decision will not come within the purview, Anwarul Kabir Bhuiyan, executive director of SEC, told journalists at a briefing, quoting the finance ministry's direction.

Ocean Containers and Khulna Power sought permission before November 5.

“The commission sought directions from the finance ministry about the direct listing proposals, as confusions surfaced centring the direct listing issue. The ministry later gave a clear direction and the commission is implementing it,” Bhuiyan said.

“We will now ask the Dhaka and Chittagong bourses to take necessary steps for the companies' direct listing,” he added.

Ocean Containers, an entity of Summit Group, submitted the direct listing proposal on June 23, 2009 and Khulna Power, another concern of the same group, on October 1.

Ocean Containers will offload 1.9 crore shares of Tk 10 each, while Khulna Power will offload 5.21 crore shares of Tk 10 each.

In the book building method, institutions bid for shares through which the price is discovered.

Ocean Containers and Khulna Power will be the fourth and fifth private sector companies that will be listed directly. Five state-run enterprises have so far offloaded shares in the stockmarket under direct listing rules.

The SEC at the yesterday's meeting also approved the rights issue of Mercantile Bank and rejected the rights offer of One Bank and BD Com for noncompliance with the securities rules.

Mercantile Bank will issue 1.44 crore ordinary shares of Tk 100 each totalling Tk 144 crore at a ratio of 2:3, meaning two rights shares will be offered for an existing three

DBH rated highest 'AAA' for the 4th consecutive year

Delta Brac Housing Finance Corporation Ltd., known as DBH was rated 'AAA' (Triple A), top to the rating scale for long term and ST-1 for short term for the fourth consecutive year.

Mr. Hamidul Huq, managing director of Credit Rating Agency of Bangladesh (CRAB) handed over theCredit Rating Report to Mr QM Shariful Ala, managing director of DBH at a function held at the latter's corporate office in Dhaka. Senior officials of DBH and CRAB were present at the function.

CRAB's independent Rating Committee comprising financial analysts from home and abroad prepared the credit rating report on the basis of qualitative and quantitative analysis and balance sheet for the financial year 2008-09 of the company.

The CRAB rating report indicated that AAA credit rating has been given to DBH for excellent financials, healthy and sustainable franchises and a first rated operating environment.

"AAA reflects DBH's strong asset quality, capital adequacy, operating efficiency, management strength, corporate governance and market leadership," managing director of CRAB Hamidul Huq said adding "in fact, the credit rating is an indication of the relative safety, security and strength of a financial institution which is relevant to its depositors and other investors such as shareholders and lenders".

SQ Celsius to go public

SQ Celsius, a concern of SQ Group, a major high-end garment exporter, is going to list on bourses in June, its top official said yesterday.

Ghulam Faruque, chairman and managing director, told The Daily Star, “Raising an amount to the tune of Tk 150 crore from the public is now under plan.” However, the size of the IPO (initial public offering) may go higher as per the company's requirement for its massive expansion, he added.

There are three sweater units under the company.

On settlement of the pre-IPO or private placement by June, the formal share trade will debut in September.

What will be the face value of shares is yet to be decided.

As per the expansion plan, an SQ Station will be set up at Bhaluka in Mymensingh district where everything required for operating production will be available under one roof. The company has already purchased land for the project.

The SQ boss also said an asset management firm is now conducting the company's asset valuation and credit rating will be completed very soon.

SQ Celsius' present paid-up capital is more than Tk 50 crore, while the number of its workers is 7,000. The total number of workers of the entire group is 10,000.

"Moreover, we have a plan to set up an exclusive garment factory to produce underwear garment in the SQ Station as the demand for this specialised product is increasing rapidly among international buyers," Faruque said.

Sri Lanka now does extremely well in this segment of garment products, he pointed out.

SQ Group, established in 1993, with having factories at Mirpur, Bhaluka and Maona, exported apparels worth $70 million in 2009. The growth was not to an expected level because of the global recession.

The group's major buyers are Marks and Spencer, H and M, NEXT and ESPIRIT, Faruque said.

In response to a query, he pointed his finger at the difficulties in bank borrowing at high interest.

“That's why I'm going to take the money from the capital market."

At present, a total of 26 companies in the textile sector are listed with the country's premier bourse, Dhaka Stock Exchange. Of the total scrips in the sector, some under-perform due to their delayed holding of annual general meeting and lapses in awarding dividends to the shareholders for years.

RAK Ceramics to float shares within next three weeks

RAK Ceramics, a Bangladesh-UAE joint venture, has started process under book-building method to hit the country's stock market.

It is the first company, which will make debut on Dhaka Stock Exchange (DSE) and Chittagong StockExchange (CSE), using such modern pricing mechanism for initial public offering (IPO) introduced in March of last year.

As part of the process, the tiles and sanitary-ware maker held an IPO road show to woo the eligible institutional investors in a city hotel Saturday. RAK received primary approval for floating shares from the securities regulator in December.

Within next three weeks, it will begin to sell shares among the institutional investors after receiving SEC consent's on bidding. Institutional bidding will be executed by DSE and CSE.

Subscription for general investors will open 25 days from the closure of the institutional bidding.

Chairman of RAK Ceramics (Bangladesh) Khater Massaad described the company's prospects and future plan to impress the institutional investors.

"We feel very proud to come in Bangladesh," said Massaad. A large number of people and growing per capita income have been creating demands for products, which mainly attracted us to invest in the growing market of Bangladesh, he said.

He said, "Meeting the local demands, the company has already begun to export products to India, Sri Lanka and Nepal and plans to enter in European market".

IDLC Finance is the lead issue manager of the RAK Ceramic IPO, while BRAC-EPL Investments Ltd is the joint issue manager.

Arif Khan, deputy managing director of IDLC Finance Ltd, presented the company's financial strength while Saiful Islam, director of BRAC-EPL, explained logic of the company's indicative price and described the bidding process.

Mr Arif also responded to the volley of questions asked by the institutional investors about the company's financial side.

DSE president Md Rakibur Rahman and local investors SAK Ekramuzzaman, who holds 10 per cent of RAK Ceramics, also spoke in the road show programme.

RAK offers 34.51 million equity shares worth Tk 10 each in face value under the book-building method. Of which, 20 per cent will be funded by eligibleinstitutional investors, 10 per cent by mutual funds, 10 per cent by non-resident Bangladeshis and 60 per cent by public.

An indicative price for each RAK share has already been built at Tk 40, including a premium of Tk 30, through bidding by seven institutions from four sectors.

According to the book building method, bidders cannot quote 20 percent more or less than the indicative price, meaning they will have to offer between Tk 32 and Tk 48 for each share. Fixing the indicative price is required to obtain regulatory approval.

As of December 31, 2009, RAK's pre-IPO paid-up capital is Tk 1.86 billion. The company's net asset value was Tk 13.69 a share and earning per share (EPS) was Tk 1.83.

Foreign entrepreneurs own 90 percent of the company, while local entrepreneurs own the rest, but local ownership will increase to 20 per cent after post-IPO.

RAK started commercial operation in Bangladesh in late 2000. Presently, the company has the market shares over one-fourth of tiles and more than three-fourth of sanitary ware products.

Book Building is a method through which companies determine the values of their IPOs based on the bidding prices from the eligible institutional investors. The SEC introduced the method in March aiming to encourage private-sector entrepreneurs to list their large and profitable companies with bourses at fair prices.

It is the process by which a price will be determined by institutional investorson the basis of an indicative price offered by the issuer company.

Using the method, the issuer company will first ask for share prices from theinstitutional investors by organising road shows, projection meeting and seminar on the company.

Then the company in association with its issue manager will fix an indicative price, which will have to be based on offering prices by at least five institutions in three categories, and send it to the securities regulator andstock exchanges.

Based on the indicative price, the institutions will bid for shares.

However, the bidders could not quote 20 percent more or less from the indicative price. Then a weighted average price will be fixed based on the higher and lower prices and shares will be allotted for institutions at the weighted average price.

The lowest will be considered as cut-off price for public offerings or general investors.

The institutions will not be allowed to sell shares in the first 15 trading days under the book building's lock-in system

Over 2 dozen SoEs set to hit stock market: Muhith

The government is going to offload shares of 26 state-owned enterprises (SoEs) to increase depth of the market, said finance minister AMA Muhith on Wednesday.

The minister also said the government was going to rationalise the interest rate of national savings directorate (NSD) certificates and that the gap between the interest rate and inflation would be maximum 1.0 per cent.

"We have decided to ask the companies to securitise themselves and prepare for floatation within six months," he said.

Some of the companies would be offloaded in six months and the rest in phases, he said.

The minister did not specify how much money the government was going to get by selling the shares.

"The amount, the number of shares and the timing of offloading will be decided later," he said.

"SoEs in power, energy, industry, bridge, communication, telecom and health sectors will be offloaded," he added.

Bangabandhu Bridge, Unilever, Bangladesh Shipping Corporation (BSC), Hotel Sheraton and Sonargaon, Essential Drugs, BTCL, Sylhet Gas Transmission Company and some other SoEs will be offloaded.

The minister said book-building method is well accepted by everybody and it is expected that the SoEs will also be offloaded through the method.

The companies needed to undergo reassessment before their share-floating and they would do it in six months, Mr Muhith said.

"BSC is almost ready to float the shares and it is expected that it will raise Tk 50 billion from the market," the minister said.

The government has also decided to offload Unilever shares and the decision is conveyed to the multinational company, he said.

There is an agreement that if the government wants to sell its stake in the company, it must offer Unilever to buy the shares first.

He lamented that the SoEs do not want to float share and termed it 'foolishness'.

"They come to the government for recapitalisation of Tk 400 million, whereas they can raise Tk 2 billion from the market," he said.

Share capitalisation had increased manifold in the last one year and the money in the market should be utilised properly, he said.

"Value of some shares is overheated and the new listings will help cool the market," he added.

The minister said 62 SoEs were identified for offloading in 2005 but it came down to 38 and six of them have already been floated.

"Six of the 32 SoEs have some problems including legal disputes and they will be offloaded after resolving those," he said.

More and more companies would now be listed with the bourses, he hoped.

The minister declined to make any comment on the reported stock exchange index manipulation.

Mr Muhith on Tuesday in parliament said the government was taking steps to do away with private placement as underwriters are obliged to buy unsold shares.

Mr Muhith said the interest rate of NSD certificates would be rationalised and a committee has been formed comprising representatives from Bangladesh Bank, Internal Resource Division and Finance Division to come up with suggestions in two months.

Turnover hits new record amid end of stocks' bull run - 13.01.2010

The benchmark index of the Dhaka Stock Exchange (DSE) plunged 90.56 points, its six-month single-day fall, on Wednesday but setting a record turnover that crossed Tk 14.0 billion mark for the first time.

Traders said strong rumours of further curbs on loan margin ratio and suspension of netting facility has put an end to the 16th straight session gaining streak.

A member of the SEC strongly ruled out such an intervention billing the rumour as 'bogus'.

Sources close to the matter said, "Somebody from the Securities and Exchange Commission asked the merchant bankers to temporarily suspend netting facility." Analysts, however, said there could have been normal profit taking after the long rally.

The plunge could have been deeper but modest buying in the closing hour shrank the day's deepest decline to record at 4848.68 points from 4640.25 points intra-low.

The intra-day volatility was more than 200 points, which is the highest ever in DSE.

Eventually, the benchmark DSE General Index (DGEN) dipped 90.56 points or 1.88 per cent --- its highest single-day fall since December 20 last year --to close at 4704.14. Earlier on December 20, 2008, it lost 81.40 points.

JS body suggests listing of ICB firms on bourses

A parliamentary body has asked the Investment Corporation of Bangladesh (ICB) to immediately list its three subsidiary companies on bourses.

“We recommended that ICB list its subsidiary companies on stock exchanges. These three firms are ICB Capital Management Limited, ICB Asset Management Company Limited and ICB Security and Training Limited,” AHM Mostafa Kamal, chairman of the Parliamentary Standing Committee on Finance Ministry, told reporters after a meeting at the Jatiya Sangsad Bhaban yesterday.

The committee also suggested the newly formed Bangladesh Development Bank Limited take steps so that the bank gets relieved of sick clients or borrowing industrialists after settling their loans and other dues.

The bank, which came into being after the merger between Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha, launched its operation recently with industrial financing, commercial banking and merchant banking at the core of its services.

Pointing his finger at the sick clients of the development bank, the parliamentary body chief said, “We have told the new bank officials to come up with a list specifying the very sick, sick and well running companies so that the list come under review in the committee's next meeting.”