FE Report

The country's largest mobile phone operator Grameenphone would float shares with two-three months after its initial public offering (IPO) was on Thursday given final clearance by the securities regulator, officials said.

The approval of what's going to be the country's largest IPO comes after months of anticipation and long dialogue between the Securities and Exchange Commission (SEC) and the GP, on changes in its face value.

The total size of the GP issue is going to be Tk 8460.06 million (118.07 million shares), of which 58.8 per cent or Tk 4860.7 million would be sold to general investors and 41.2 per cent or Tk 3599.36 million for institutions.

The face value of the GP share would be Tk 10 with a premium of Tk 60. The existing paid up capital is Tk 12152 million and net asset value Tk 22.70.

Oddvar Hesjedal, the GP chief executive officer, said the approval would lead to an "expeditious" listing of the company in Dhaka and Chittagong bourses.

"We are very pleased to have received the official consent from the SEC. We are ready and will be following a fast process fore fulfilling of certain necessary conditions and formalities," he said.

A SEC official told the FE that the floatation would be completed within the next three months. "It won't go beyond September," he said, speaking on condition of anonymity.

Officials at the securities regulator said they gave the final IPO clearance on Thursday. "With approval the IPO of GP today, the long waiting has ended successfully," Farhad Ahmed, executive director of the SEC, said.

They said the IPO would shatter all records at the bourses and "bring depth" to the oft-volatile and shallow market, dominated by banking and financial shares for decades.

"This is going to be the biggest issue and it will make the market stable. It will send positive signals to other big companies who have until now been reluctant to list their companies," said SEC spokesman Anwarul Kabir Bhuiyan.

The move comes after the finance minister in his budget cut 10 per cent tax rebate for the mobile companies if they offload 10 per cent of their shares.

Among the conditions set by the regulator for the approval are that GP would have to convert the face value of the offered shares from Tk 1.0 per share to Tk 10 per share.

The GP said it has further decided to revise the total offer size, including IPO and pre-IPO, from 8.95 per cent to 10 per cent of its total share capital to take advantage of the tax rebate.

GP is the country's largest mobile phone operator, owning about 46 per cent of the market. It is majority owned by Telenor of Norway and 38 per cent by Grameen Telecom, a sister company of Grameen Bank.

It is also the country's largest company in terms of sales, as it clocked a turnover of around Tk 62 billion in 2008.

GP filed its final IPO application with the SEC in December 2008 and had submitted the final prospectus in January 2009.

In December, the GP has already raised money from the private placement offering (PPO), oversubscribed by three times, which has been allocated at the price of Tk 74.0 per share.

Market experts hailed the GP's much expected IPO approval, saying the investors are ready to greet its shares with full confidence and enough financial capacity.

"It's a positive development for the country's stock market. I think the market can easily absorb GP shares no matter how big it would be," Yawer Sayeed, a leading market expert, said.

"It will take the market one level up in maturity index," he added.

Earlier last July, the GP planned to raise $300 million--$150 million from the stock market and the rest through private placement.

Citigroup Global Markets Bangladesh Private Ltd. acted as the placement agent for the pre-IPO placement and has been appointed as the Issue manager for the IPO.

In a presentation to the SEC on March 25, 2008, GP disclosed that it had a valuation of $3.75 billion (Tk 25,875 crore), which the regulator termed high.

Later in June 2008, the company revised its valuation down to $3.2 billion that was accepted by the SEC.