DHAKA (AFP) - – Bangladesh's largest ever initial public offering by mobile phone provider Grameenphone was oversubscribed by several times, officials said Thursday, as the window for local subscriptions closed. "The response from retail investors has been overwhelming," Silmat Chisti, head of the issue manager company, Citigroup Global Markets, said.
Thousands of people have queued at banks around the country since Sunday when subscription opened for the IPO, an event seen as a key test for the national stock market. Grameenphone plans to raise 70.4 million dollars through the IPO sale of 69.44 million shares.
The company, 62-percent owned by Norway's Telenor Group, has raised the same amount from institutional investors. It says the money will be spent on network expansion and developing its information technology infrastructure. Non-resident Bangladeshis have until October 18 to submit their applications for shares and the company is expecting to start trading on the stock exchange next month.
Grameenphone is 38-percent-owned by Grameen Telecom, a subsidiary of micro-finance giant Grameen Bank, which was set up by 2006 Nobel peace prize winner Muhammad Yunus.
It has around 21 million of Bangladesh's fast growing 46 million cellular subscriber base and is the country's largest private company in terms of revenue.
DHAKA (AFP) – Bangladesh's largest mobile phone provider Grameenphone will launch the country's biggest public sale of shares on Sunday, a move seen as a key test for the national stock exchange.
Analysts expect the Initial Public Offering (IPO) to raise 141 million dollars and be several hundred times oversubscribed.
"It's the biggest IPO in the capital market since our independence in 1971," Dhaka Stock Exchange president Rakibur Rahman told AFP.
"Almost everyone in the country who has an account number is vying for a slice of the pie," he added. "Many have already disposed of shares of other companies while some have even sold gold jewellery to join the bonanza."
Grameenphone, 62 percent owned by Telenor of Norway, is selling a 10 percent stake to institutional and private investors, with 69.44 million shares up for grabs. Subscriptions for the shares will continue until October 18.
The face value of the shares has been fixed at 10 taka (seven cents) with a 60 taka premium on each share. A private investor can buy a maximum of 200 shares.
Officials said some 150,000 new share accounts -- a tenth of the total number in the country -- had been opened in the past three months as potential investors readied to qualify to take part in the IPO.
It has around 21 million of Bangladesh's fast growing 46 million cellular subscriber base.
Securities and Exchange Commission chief Ziaul Haq Khandekar hailed the IPO as a "watershed event," saying it would bring "depth and maturity" to the country's share market.
"The GP IPO will bring qualitative change to the market. I think the move will instil confidence in other major companies to follow suit. It will make the stock market more stable and the centre of our economic activity," he said.
The Dhaka Stock Exchange, which hosts companies with a market capitalisation of around 15 billion dollars, is tiny compared to other bourses in Asia.
The market frequently suffered from rogue trading and unbridled speculation, DSE president Rahman said.
Investment banker Yawer Sayeed said many of the 300-plus companies traded in the market "are simply trash."
"Speculation is so rampant. Trading is often dominated by companies that exist only in name," he said.
In 1996, the DSE index collapsed from an all-time high of 3,600 points to fewer than 500 points, prompting stricter new rules on trading.
The market still lacks top local companies and solid foreign investment, Sayeed said.
"But now the Grameenphone IPO has created a huge positive buzz that we have for years been looking for. It is the largest Bangladeshi company in terms of revenue and it is the most recognised brand," he said.
'unusual' share trading of Navana CNG
The Securities and Exchange Commission yesterday formed a probe committee to investigate 'unusual' share trading of Navana CNG, which received a bonanza from the market through offloading shares directly within a record low time.The stock market regulator also asked the committee to submit the probe report within October 8.The two-member body, headed by SEC Executive Director ATM Tariquzzaman, was formed after the market watchdog observed unusual trade of the company's shares in the stock exchanges through designated brokers into the first five trading days of listing.The other committee member is SEC Director Mohammad Rezaul Karim.ICB Securities Trading Company and Sharp Securities were the designated selling agents for Navana CNG.“The commission formed the probe committee to find out whether there were any irregularities or manipulation,” said an SEC high official.Navana CNG Ltd, a sister concern of Navana Group, debuted on the stock exchanges on August 30 under direct listing method and it offloaded a major portion at high prices in the first five trading days.It sold half of its shares, or 1.81 crore ordinary shares of Tk 10 each, within just seven trading days.On the first day, the price of a Navana CNG share rose as high as Tk 270 before closing at Tk 190.48.The average price of the shares was between Tk 200 and Tk 205 in the first five days.The CNG (compressed natural gas) conversion and re-fuelling company received a bonanza of around Tk 360 crore against Tk 18 crore shares.The hefty gains made by the private company also prompted Dhaka Stock Exchange to decide against allowing any other private company to join the bourses under direct listing system.The DSE at a board meeting on Tuesday decided that no companies except the government-owned ones will be listed directly on the stock exchanges.Earlier, two other private sector companies -- Shinepukur Ceramics and ACI Formulations -- also made hefty business by offloading shares under direct listing system.To protect such an unusual flight of capital from the market, a special committee formed by the SEC had recommended some amendments to the existing direct listing rules.But neither the SEC nor the DSE took initiatives to bring changes in the direct listing method based on the recommendation.Besides the three private companies, five government entities -- Desco, Power Grid, Jamuna Oil, Meghna Petroleum and Titas Gas -- were listed directly on the bourses.
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Bangladesh Commerce Bank (BCB).FE ReportThe government is likely to decide soon on the offloading of its stake in the Bangladesh Commerce Bank (BCB).The ministry of finance (MoF) has sought the opinion from the law ministry on a number of options suggested by the central bank on the divestment of the government's stake in the BCB.Simultaneously, Finance Minister AMA Muhith has asked the ministry officials to put the BCB privatization proposal on the agenda for the ensuing meeting of the fiscal and monetary affairs coordination council for broader consensus, sources said.The BB has recently recommended four options to the government for full privatization of the BCB in the backdrop of an ever-deteriorating financial health of the bank. The government owns 40 per cent stake of the bank, which, originally, was a private sector non-banking financial institution.The BB has suggested the government to increase the approved paid-up capital of the BCB to Tk 4.0 billion from its current level of Tk 2.0 billion prior to the implementation of any of the first three options suggested by it.In the first option, the BB has suggested increase in the paid-up capital of the bank and transfer of the same to a strategic partner.The central bank in its second option recommended formulation of a reconstitution scheme for the BCB and transfer its share to both new investors and to existing depositors of the bank.The merger of the BCB with any other bank, particularly with one of state-owned banks, is the third option suggested by the BB.The BB in its last option recommended selling off the government's share to private sector without increasing the BCB's paid-up capital.The BB report while highlighting the sickness of the bank said the bank has a capital shortfall of Tk 1.76 billion and provision shortfall Tk 781 million. The non- performing loan as of March last was 27.67 of the outstanding loan of the bank.The Finance Division last week sought opinion from the law ministry on BB's recommendations. The letter of the Division asked the law ministry to give its comment whether the government could proceed with any of the BB's recommendation to wash his hands of the troubled bank.''We are yet to receive the opinion from the law ministry,'' a high official in the MOF told the FE.He said the issue of BCB would be placed at the fiscal and monetary affairs coordination council to be held in early next month.Meanwhile, a number of large local investors have expressed their willingness to buy the BCB, a source in the Finance Division said. The aspirants are pursuing relentlessly to buy the shares of the bank held by the government, it is learnt.The coordination council meeting, to be attended by council members, including the BB governor, secretaries of the finance division, internal resources division, ministry of commerce and ministry of planning, will be presided over by the finance minister.The bank formally started its operation form the mid- September 1999 with the paid-up capital of Tk. 920 million. 0f the amount, Tk. 300 million was provided by the government, Tk 100 million jointly by Sonali Bank, Janata Bank and Agrani Bank and the rest Tk.520 million by the depositors.Presently, three directors represent depositors on 12-member boards of directors of the bank.