Four listed cos raise Tk 10.42b through rights offer

Dhaka,  Wed,  23 August 2017
Published : 20 Jun 2017, 21:57:45
Review of FY 2016-17

Four listed cos raise Tk 10.42b through rights offer

Four listed cos raise Tk 10.42b through rights offer
Babul Barman

Four listed companies raised an aggregate amount of Tk 10.42 billion, including premium, in the outgoing fiscal year (FY) 2016-17 from the capital market through rights issue.

The rights issue is an offer of new shares by a company to its existing shareholders in proportion to the shares they already own and usually at a discount to market price.

The companies intended to issue rights shares to strengthen their capital structure and also to use funds for business expansion and loan repayment.

According to statistics available with the Dhaka Stock Exchange (DSE), four listed companies issued collectively about 858 million rights shares and raised Tk 10.42 billion, including premium.

IDLC Finance raised Tk 2.51 billion, including premium through 125.70 million rights shares, Saif Powertec collected about Tk 1.74 billion, including premium by issuing 116.30 million rights shares and Bangladesh Thai Aluminium mobilised Tk 523 million through 52.34 million rights shares.

However, IFIC Bank's rights subscription is going on, which will collect Tk 5.64 billion through 564 million rights shares at par. The bank's rights subscription will continue till June 29.

Among them, two companies - IDLC Finance and Saif Powertec - took premium. IDLC Finance took Tk 10 as premium and Saif Powertec took Tk 5.0 as premium against Tk 10 face value while Bangladesh Thai Aluminium and IFIC Bank issued rights at par.

Of the total Tk 10.42 billion raised through rights, the IFIC Bank, however, mobilised more than half of the total funds raised through rights shares.

In the fiscal year 2015-16, two listed companies raised only Tk 3.13 billion through rights issue as Bangladesh Securities and Exchange Commission (BSEC) followed 'go-slow' policy in giving rights approvals.

Market insiders said low application from listed company, strict scrutiny and delay in approving the rights offer by the regulator and a bearish trend in the secondary market were the main reasons behind the low number of rights offer last fiscal year.

"The securities regulator was very conservative in allowing the listed firms to raise funds through rights offering. Even, the regulator rejected some of the applications of rights offering," said an issue manager, seeing anonymity.

A BSEC official, however, said insufficient documents for regulatory approval and a downward trend in the secondary market were the factors behind the regulator's stance.

The securities regulator also imposed some conditions on rights issue rules in 2013 to make the capital raising mechanism more transparent.
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