The securities regulator on Wednesday approved the country's largest ever IPO (initial public offering) proposal of mobile phone operator Robi Axiata for raising more than Tk 5.23 billion from the capital market.
The Bangladesh Securities and Exchange Commission (BSEC) has approved the proposal that also included the demand for allotting the shares among the company employees.
Robi will utilise the IPO fund for network expansion along with bearing the expenses of the public offering.
The company will offload over 523.8 million shares at an offer price of Tk 10 each. Of the shares, 387.7 million shares will be issued through IPO while the remaining 136.1 million to employees under the Employee Share Purchase Plan (ESPP) at an offer price Tk 10 each.
A BSEC official said a two-year lock-in period will be imposed on the shares which will be distributed among the employees without lottery.
Robi will be listed with the stock exchanges with an EPS (earnings per share) of only Tk0.04 for the year ended on December 31, 2019.
In the same period, the company's net asset value (NAV) without revaluation stood at Tk 12.64 per share. The company's weighted average EPS of five years is a negative value (Tk 0.13).
Asked about the reasons of regulatory approval to a company having an EPS of only Tk 0.4, BSEC chairman Prof. Shibli Rubayat Ul Islam said the listing of multinational companies is a long standing demand of the capital market.
"Earnings of Robi declined drastically as the company had to bear all liabilities of Bharti Airtel of India while completing acquisition," Mr. Islam told the FE.
He said the EPS will rise gradually as tax burden will be reduced after the listing with the stock exchanges.
According to the BSEC chairman, the net profit of Robi after listing will be enhanced significantly due to reduction of corporate tax to 40 per cent from 45 per cent.
"A huge amount of money is saved if a telecom company gets 5.0 per cent tax advantage. We hope this money will be distributed as dividend in future," he said, adding that the BSEC approved it considering different projections.
A BSEC official said the regulator also approves the IPO of even green field companies considering their future aspects.
Robi will be the second listed telecommunication company after the listing of largest mobile phone operator Grameenphone (GP) in 2009.Robi has reported that it has 49 million subscribers across the country.
GP floated the country's second largest IPO worth Tk 4.86 billion, other than the private placement shares.
After getting the regulatory approval, Robi thanked the regulator through issuing a statement on Wednesday.
"This is indeed a historic moment for Robi. We are immensely proud to be coming to the stock markets with the largest ever stock listing," Robi said.
It said the approval paved the way for the people of the country to become shareholders of the company. "We look forward to the support of our prospective shareholders to create a Bangladesh that thrives on innovation."
IDLC Investments is working as the issuer manager of Robi Axiata.
At Wednesday's meeting, the securities regulator also approved another IPO proposal of Crystal Insurance Company along with allowing 26 insurance companies to raise capital below the stipulated amount of Tk 300 million.
As per BSEC approval, Crystal Insurance Company will raise a capital worth Tk 160 million under fixed price method. The company will raise the capital through offloading 16 million shares of Tk 10 each.
The IPO fund will be utilized for the purpose of making investments in the capital market and FDR along with bearing IPO expenses.
As per the financial statement for the year ended on December 31, 2019, the net asset value (NAV) per share of the company stood at Tk 24.42 (without revaluation) while the earnings per share was Tk 2.92.
Sonar Bangla Capital Management is the issue manager of Crystal Insurance Company.
The securities regulator has waived 26 insurers from a mandatory condition regarding minimum amount of capital that has to be raised by a company under fixed price method.
The regulator has relaxed the mandatory requirement following an application by the Insurance Development and Regulatory Authority (IDRA).
The securities regulator has also relaxed the condition to facilitate the listing of insurance companies.
As per the existing rules, a company has to raise at least Tk 300 million from the capital market under the fixed price method.
As per the BSEC's decision, 26 insurance companies will be allowed to raise a minimum amount of capital worth Tk 150 million or above. The securities regulator will issue a notification in this regard soon.
On Wednesday, the securities regulator approved Tk 5.0 billion subordinated bond to be issued by Dutch-Bangla Bank.
The bank will utilize the fund to strengthen its Tier-II capital base. The bond's characteristics are unsecured, non-convertible, fully redeemable and floating rated. The offer price of the bond is Tk 0.1 million per unit. As per the BSEC approval, Aamra Networks will also raise capital worth Tk 1.0 billion by issuing non-convertible zero coupon bond.
The company will implement a new project and repay loan with the fund to be raised through issuing bond. The fund will also be utilised as working capital.
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