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

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.

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.

Janata submits Tk 1,000cr IPO plan

Janata Bank has submitted a Tk 1,000 crore IPO plan to the market regulator for approval.

The state-owned commercial bank put forward its IPO (initial public offering) prospectus to the Securities and Exchange Commission (SEC) early this week, said a senior SEC official.

The bank's IPO, if approved, will be the largest public offering that will surpass the Grameenphone's offering of Tk 972 crore including IPO and pre-IPO.

The bank will raise the amount through floating one crore ordinary shares of Tk 100 each at an offer price of Tk 1,000 that shows Tk 900 as premium per share.

With the existing paid-up capital of Tk 375 crore, the bank has sought the premium considering its high net worth fundamentals such as asset value, earnings and brand value.

As of December 31 of 2008, the bank's net asset value per share was Tk 350 and earning per share was Tk 121.

ICB Capital Management Ltd is the issue manager of Janata Bank IPO.

Janata, the second biggest commercial bank after Sonali, will be the second state bank to be listed on the stock exchanges with Rupali Bank being the first.

The bank was turned into a public limited company in November 2007 in a bid to bring more efficiency and transparency in its activities.

The two other state-owned commercial banks -- Sonali and Agrani -- also became public limited companies at the same time with the same purpose.

Janata, which was nationalised in line with Bangladesh Bank (Nationalisation) Order 1972 immediately after the country's independence in 1971, has now 849 branches across the country.

However, it may not be so easy for Janata Bank to get SEC nod, as the market regulator is now stuck in indecision over such approval following a government decision on IPO floatation.

The finance ministry at a meeting on November 5 decided that from now a company will have to go for IPO with minimum shares equivalent to 40 percent of its paid-up capital. The SEC has also been directed to go by the new decision.

The restriction has already pushed at least four companies' IPOs into uncertainty with Janata Bank being the latest.

RAK Ceramics, Beacon Pharmaceuticals, LSI Industries and Industrial and Infrastructure Development Finance Company Limited (IIDFC) have been awaiting a nod from the regulator for months after submitting their IPO prospectuses.

Melee over Golden Son refund warrant distribution

The unsuccessful applicants, who applied for the initial public offering (IPO) of Golden Son Limited, staged a demonstration Monday in front of the Securities and Exchange Commission (SEC) demanding action against the company for its irresponsibility during distribution of refund warrants on the day.

However, the SEC assured the angry applicants of immediate action against the company, if it fails to come up with a proper explanation on the melee during distribution of the refund warrants, SEC sources said.

"We've sent a letter to the company asking it to explain why and what happened during distribution of the refund warrants Monday. If the company fails to come up with a satisfactory explanation by Tuesday (Today) and any proper initiative is not taken to ensure fair redistribution of refund warrants, the SEC will go for immediate action against the company and its issue manager," SEC Executive Director ATM Tariquzzaman told the FE.

According to unsuccessful applicants, the company was supposed to hand over the refund warrants at 10 am Monday from the Mahbub Mansion at Shahjahanpur in the city. But at that time the applicants found there none of the company except a bundle of refund warrants. Then a competition started among the applicants for collecting their refund warrants leading to a melee. So most of them were unable to collect refund warrants. At one stage about five hundred applicants got furious and went to the SEC, where they staged the demonstration at around 12 pm.

Then they met the SEC chairman and sought his help. The SEC chairman assured them of taking an initiative for ensuring fair redistribution of the refund warrants.

When contacted, the company could not present any explanation on the incident.

The company launched its IPO on November 8 and closed the offer on November 12. For non-resident Bangladeshis, the last date for application was November 21. The IPO lottery draw was held on December 10. Its issue manager is the ICB Capital Management

Provati insurance

IPO lottery of PICL will be held on Tuesday, 15th December, 2009 at 10.30 am in Banghabandhu International Conference Center, Sher-E-Bangla Nagar, Agargaon, Dhaka-1207.

Janata Bank submits prospectus to SEC

Janata Bank submitted its prospectus to the Securities and Exchange Commission (SEC) Sunday, Janata’s issue manager said.

Janata Bank, subject to the approval of SEC, will offer 10 million shares of Tk 100 each for subscription under its IPO placement in the stock market which is 16.28 percent of the pre-IPO paid-up capital worth Tk 4.84 billion.

The ministry of finance last month decided that the companies intending to raise capital by offloading shares must go for IPO with shares equivalent to atleast 40 per cent of the paid-up capital.

But this decision has not been incorporated in the SEC regulation yet.

"We submitted our prospectus according to the government plan and after obtaining approval of finance ministry. The SEC has the authority to approve or reject our prospectus," Belal Hossain, a senior consultant of Janata Bank told the FE.

"The commission will decide which regulation will be applicable for the approval of IPO submitted by Janata Bank," an official of the SEC told FE.

Janata Bank, subject to the approval of SEC will raise Tk 10 billion by offloading the 10 million shares with a face value of Tk 100 each. The offer price of a share will be Tk 1,000 including a premium of Tk 900, subject to the approval of SEC.

IPO restrictions may hinder market growth: Analysts

A hard time for stock market is ahead, as the government has clamped restrictions on initial public offerings by the new companies intending to raise capital from public, market experts say.

When demand for new issues is increasing day by day in line with the growing pace, the restriction has also pushed at least four companies into uncertainty.

Although the four companies -- RAK Ceramics, Beacon Pharmaceuticals, LSI Industries and IIDFC -- have been awaiting a nod from the regulator for months after submitted their IPO prospectuses, the Securities and Exchange Commission is stuck in indecision.

The finance ministry at a meeting on November 5 decided that from now on a company will have to go for IPO with minimum shares equivalent to 40 percent of its paid up capital. The SEC has also been directed to go by the new decision.

The amounts of share offloading by the four companies are far below the government's new imposition on capital rise from the stock market.

RAK Ceramics IPO size is Tk 30 crore, which is more than 16 percent compared to its existing paid up capital of Tk 185 crore, while Beacon Pharmaceuticals' Tk 30 crore is around 16 percent of its Tk 190 crore paid up capital.

LSI Industries IPO is offering Tk 20 crore worth shares each at Tk 80 including premium of Tk 70 per share. After issuance of new shares Tk 2.5 crore will be added with the existing Tk 22.6 crore paid up capital, which is around 11 percent of the paid up capital.

As of June 2009, IIDFC's paid up capital is Tk 14.72 crore, and with the IPO floatation another Tk 5 crore will be added to the existing paid up capital. The company is offering Tk 7.5 crore worth shares including premium of Tk 5 crore.

Asked about the IPO approvals, Mansur Alam, acting chairman of SEC, told The Daily Star that the commission would reach a decision on the scrutiny of all legal aspects.

Market analysts think government's fixing the amount of capital rise by any company may discourage going public. These companies will have, then, no other options than bank finance, they say.

Pointing to the fact that a company may not necessarily go for raising capital equivalent to 40 percent of its paid up capital, the analysts say any company may need to raise small size funds.

When his attention was drawn to the new restriction, former finance adviser Mirza Azizul Islam said it's not a market- friendly directive.

“Many companies, especially the big ones with large paid up capital, would not come up with share offloading,” he said.

Besides, he said, the market might not absorb IPO of large capital base companies like Grameenphone. “Grameenphone offered only five percent of its paid up capital through IPO and the IPO was oversubscribed by 3.5 times. If it offered 40 percent of its paid up capital, the IPO could be under-subscribed,” he explained.

“It's their wrong perception those who said the new decision will protect price fluctuation of small size IPO. Price fluctuation depends on investors' view of perspective,” said Islam, who also served as SEC chairman for three years.

The finance ministry at the meeting on November 5 also directed the SEC to introduce book-building method, a modern pricing system for IPO.

But the directive on book-building contradicts the earlier ones, which stated that no companies can come up with IPO less than 40 percent of its paid up capital.

According to book-building rules, a company can go for IPO with shares equivalent to 10 percent of its paid up capital, or Tk 30 crore, whichever is higher.

Janata Bank likely to submit prospectus to SEC Thursday

Janata Bank Limited is likely to submit its prospectus to the securities regulator by Thursday seeking the latter's nod to go for initial public offering (IPO) while some other state-owned banks like Sonali and Agrani are also planning to offload shares in the stock market.

Janata Bank, subject to the approval of SEC will offer 10 million shares for subscription under its IPO placement in the stock market, sources said.

"We'll submit the prospectus to the Securities and Exchange Commission (SEC) by Thursday. The procedure of submission is already completed," an official of the ICB Capital Management Limited, the issue manager of Janata Bank Limited, told the FE.

The state-owned bank, subject to the approval of SEC will raise Tk 100 billion (1000 crore) by offloading the 10 million shares with the face value of Tk 100 each. The offered price of a share will be Tk 1,000 including a premium of Tk 900, the source added.

The bank has proposed the premium rate based on its fundamentals compared with other banks, according to the source.

Before the IPO approval, the bank will issue bonus and rights shares totalling Tk 1.00 billion and Tk 1.25 billion respectively.

The bank's present paid-up capital is Tk 2.59 billion, which will rise to Tk 4.84 billion after issuance of the bonus and rights shares.

The present Earning Per Share (EPS) and Net Asset Value (NAV) per share of Janata Bank are Tk 121 and Tk 349.37 respectively. The projected EPS for the next year is Tk 132.

Janata Bank Limited, one of the state-owned commercial banks in Bangladesh, also has an authorised capital of Tk 8.0 billion, a reserve of Tk 4,182.52 million and a retained surplus of Tk 2,285.94 million. The bank has a total asset of more than Tk 267.157 billion as of December 31, 2008.

DBH Mutual Fund IPO hits market Dec 13

The IPO subscription of DBH First Mutual Fund worth Tk 1.20 billion begins December 13.

The subscription period for Resident Bangladeshis ends December 20 while Non-Resident Bangladeshis will be allowed to deposit the money till December 29. The fund is offering Tk. 320 million for Resident Bangladeshis general public subscription, Tk 40 million for NRBs and Tk. 40 million reserved for Mutual Funds.

DBH has decided to sponsor the mutual fund due to its ongoing commitment and active participation in product innovation as well as development and institutionalization of the capital markets.

Delta Brac Housing Finance Corporation Limited (DBH), the sponsor of the fund, is AAA rated and the largest specialized Housing Finance Institution in the private sector of Bangladesh.

DBH's funds under management presently are in excess of Tk.25.60 billion.

"DBH has an impressive track record in pioneering financial products and services and has discerningly identified the investment merits and upside potential of launching its first mutual fund," the company said.

LR Global Bangladesh AMC is the Asset Manager of the fund. LR Global has a long history of deep and extensive experience in investments in frontier countries including Bangladesh. LR Global was incubated within Rockefeller & Co. LR Global Partners was founded in June 1997 by the LR Global partners Leon Levy, Jack Nash and the Rockefeller family. 'L' in LR stands for Logan the founding partner and 'R' for Rockefeller.

IPO subscriptions of two mutual funds, one ins company begin today

The initial public offering (IPO) subscriptions of two mutual funds and one insurance company begin today (Sunday) aiming to raise over Tk 3.0 billion from the general public.

The issues are Trust Bank First Mutual Fund, Prime Bank First ICB AMCL Mutual Fund and Dhaka Insurance Ltd.

Of them Trust Bank will raise Tk 2.0 billion, Prime Bank Tk 1 billion and Dhaka Insurance Tk 108 million.

Face values of both the mutual funds are Tk 10 while the offer price of Dhaka Insurance is Tk 120 (Face value Tk 100 and premium Tk 20). Subscription of another mutual fund titled DBH First Mutual Fund worth Tk 1.2 billion will begin December 13.

Meanwhile, the IPO lottery draw of Golden Son Limited will be held on December 10, subject to approval of the Securities and Exchange Commission (SEC), the company sources said.

Another company-Provati Insurance Limited will hold the IPO lottery on December 15, also subject to approval of the SEC.

The lottery dates of two companies-ICB Employee Provident Mutual Fund One and RN Spinning Mills, however is yet to be fixed.

The initial public offering (IPO) of Provati Insurance received an overwhelming response from the applicants, who deposited more than Tk 5.06 billion (506 crore), 56.23 times the value of the total IPO shares worth Tk 90 million (9 crore) on offer for subscription.

The refund warrants of the unsuccessful applicants will be sent back to their respective bank accounts during December 18 to 23 from Dhaka Zilla Krira Sangstha and Motijheel AGB Colony Community Centre, the company sources told the FE.

"Provati Insurance saw the second such rush for IPO subscription after Grameenphone. The market lot of Provati was suitable for the subscribers, if their capability is taken into account. This is the main reason of the overwhelming response of the applicants," Mohsin Reza, office secretary of Provati's issue manager AAA Consultants & Financial Advisers Limited, told the FE.

The face value of a share is Tk 100 and the market lot contains 50 shares. The company takes no premium.

According to the prospectus of the company, its earning per share (EPS) and net asset value (NAV) per share were Tk 20.29 and Tk 176.29 respectively as of December 31, 2008. Its paid-up capital is Tk 150 million (15 crore).

Golden Son floated 10 million shares of Tk 10.00 each (Tk 200 million) at an issue price of Tk 20.00 including a premium of Tk 10.00 each through repeat public offering (RPO). Golden Son Limited, a company with joint venture of Taiwan started its subscription on November 8 and closed on November 12. For non-resident Bangladeshis the subscription was opened up to November 21.

The present trading category of Golden Son Limited is "A", based on financial statement as on December 31, 2008. ICB Capital Management Limited is the issue manager of the company's RPO.

The company launched its operation in 2003 producing sporting toys, aerosole and house hold items, garments and fan accessories.

Goldenson ipo

Golden Son Limited

Nature of Business: Golden Son Limited is involved in producing and exporting nonelectrical and Sports items to Taiwan, U.K, Canada, South Africa, Australia, Hong Kong and Singapore.

Subscription Open: November 08, 2009

Subscription Close: November 12, 2009

For Non resident Bangladeshi : November 08, 2009 to November 21, 2009

Offer Price (Tk.): 20.00

Face Value (Tk.): 10.00

Market lot (Share): 500

Public Offer (Shares): 1,00,00,000

No. of shares before RPO: 27,530,209

No. of shares after RPO: 37,530,209

Total Issued Shares: 37,530,209

Total Paid up Capital (after RPO): Tk. 375,302,090.00

Reason for RPO: Construction of building, Repayment of term loan, Acquisition of

plant and machinery, Registration cost of land.

EPS (as per prospectus) 1.52 (as on 31.12. 2008)

NAV per share (as per prospectus) 20.49 (as on 31.12 . 2008)

Manager to the Issue ICB Capital Management Limited

Website www.gslbdg.com