The securities regulator has approved the proposal of issuing above 20.83 million ordinary shares by Aman Cotton Fibrous Limited to raise a capital worth Tk 800 million under the book building method.
The book building is a process through which an issuer attempts to determine the price to offer for its security, based on demand from institutional investors.
The approval to initial public offering (IPO) proposal came Tuesday at a meeting held at the office of the Bangladesh Securities and Exchange Commission (BSEC).
At Tuesday's meeting, the securities regulator also decided to take action against the directors (other than independent directors) who have failed to hold at least 2.0 per cent stakes individually in their own companies.
The BSEC has also decided to issue a directive to hold 30 per cent shares of paid-up capital of their respective companies collectively.
The capital market regulator came up with the directive on November 22, 2011 after the market crash in 2010-2011 with a view to increasing sponsor-directors' share purchasing for protecting market from more fall.
Of the total 20.83 million shares, 12.50 million shares of Aman Cotton Fibrous Limited will be issued to eligible investors (EIs) at the cut-off price of Tk 40 each which was set by the eligible investors through the uniform and integrated electronic subscription method in November last year.
The securities regulator on September 12, 2017 allowed Aman Cotton to discover cut-off price of its shares to be sold to EIs. Later, the cut off price of Tk 40 was determined through electronic bidding participated by EIs.
Remaining 8.33 million shares will be sold to general shareholders, including non-resident Bangladeshis, at 10 per cent discount on cut-off price of Tk 40, meaning the general investors will get each share of the company at Tk 36 each.
The company will use the IPO fund as part of its efforts to buy machinery, clear bank loans and to meet the IPO expenses.
The net asset value of the company was Tk 35.63 as of June 2016 and weighted average earning per share (EPS) was Tk 3.49, according to the IPO prospectus.
ICB Capital Management is the issue manager of the Aman Cotton Fibrous' IPO.
Aman Cotton is the second company of Aman Group which is going to be listed on the stockmarket. Aman Group also plans to float shares by all of its subsidiary companies.
At Tuesday's meeting, the securities regulator also approved the draft prospectus of 'SEML FBLSL Growth Fund'.
The total size of the 'SEML FBLSL Growth Fund' will be Tk 1.0 billion. Of the fund's total size, Tk 100 million was financed by FBL Securities Limited, the sponsor of the mutual fund and Tk 350 million was collected through pre- initial public offering (IPO) placement.
Remaining Tk 550 million will be collected through initial public offering from general investors. The face value of the fund is Tk 10. Strategic Equity Management is the fund manager, while Bangladesh General Insurance Company and Brac Bank are the trustee and custodian of the Fund respectively.
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