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Mercantile Bank Perpetual Bond

10pc fund to be raised through public offer

FE REPORT | June 18, 2021 00:00:00


The board of directors of Mercantile Bank has now decided to issue 'Mercantile Bank Perpetual Bond' of Tk 7.0 billion in a revised manner in order to comply with the securities regulator's latest directive.

As per the revised manner, the bank will raise Tk 6.30 billion (90 per cent) through private placement and Tk 700 million (10 per cent) through public offer instead of 100 per cent private placement as previously decided, according to a filing with the Dhaka Stock Exchange (DSE) on Thursday.

Referring to the earlier news published on April 28, the board of the bank said they revised the bond issue manner to comply with Bangladesh Securities and Exchange Commission (Debt Securities) Rules, 2021 and Directive issued on May 23, 2021.

According to the BSEC directive, if an issuer intends to raise debt capital through issuance of perpetual bond, it shall make public offer for at least 10 per cent of its intended offer.

The stock market regulator's directive also include that perpetual bonds which will be issued by the banks must be listed on the bourses through the direct listing method.

Previously, the perpetual bonds were issued only through private placement and they were not tradable at the stock market.

Perpetual bonds are fixed-income securities with no maturity date and investors receive interest in the form of coupon payments.

The bank will issue the perpetual bond for raising funds as part of the additional Tier-I (AT-1) capital to support Bank's Basel III compliance in line with Bangladesh Bank guidelines on risk based capital adequacy dated December 2014, said the filing.

The bond issue is subject to approval from concerned regulatory authorities -- Bangladesh Bank, BSEC as well as approval of the shareholders of the bank.

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Each share of the bank, listed on the DSE in 2004, closed at Tk 13.40 on Thursday, gaining 1.52 per cent over the previous day. Its shares traded between Tk 10.60 and Tk 15.90 in the past one year.

The bank's first quarter (Q1) consolidated earnings per share (EPS) rose to 0.64 for January-March, 2021 which was Tk 0.55 for the same quarter of the previous year.

The bank disbursed 10 per cent cash and 5.0 per cent stock dividend for the year ended on December 31, 2020.

The bank's paid-up capital is Tk 10.33 billion, authorised capital is Tk 12 billion and the total number of securities is 1.03 billion.

The sponsor-directors own 37.69 per cent stakes in the bank while the institutional investors own 24.78 per cent, foreign investors 4.08 per cent and the general public 33.45 per cent as of May 31, 2021, the DSE data shows.


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