Now general investors to get 70% IPO shares

1.     Now general investors will get 70% IPO shares
2.     NRBs will get only 5% IPO shares in both categories
3.    15% private offer will be part of IPO
4.     A company cannot apply for an IPO within two years after the capital raising
5.     Firms will make a public offering in at least three slabs

From now on, general investors in the capital market will receive 70% shares of any initial public offering (IPO).

Previously, they would get 50% shares of any IPO in the fixed price method and 40% in the book building method.

To put an end to market manipulation, the Bangladesh Securities and Exchange Commission (BSEC) has already brought changes to the BSEC (Public Issue) Rules 2015.

As per the amended rules, institutional investors' quota in primary shares has been brought down to 20%, from 30%, and 25%, from 40%, in the fixed price and book building processes, respectively.

Besides, non-resident Bangladeshis (NRB) will get 5% IPO shares in both categories instead of 10%.

Mutual funds will get only 5% primary shares in the fixed price method while they will be treated as institutional investors in the book building system.

As a result, BSEC expects, general investors' participation will be increased due to an increase in the IPO quota.   

The issuer company may offer private placement up to 15% of the size of its initial public offering, which will be treated as a part of the said IPO.

This share will be allotted upon commission's consent for such IPOs.

The issuer company will not be able apply for an IPO within the preceding two years.

But the issuance of shares in exchange for valid consideration for other forms of collaborative investments is allowed within the stipulated time subject to the prior approval of the commission.

The company has to make a public offer of at least 30% if the post-IPO paid-up capital is less than or equal to Tk75 crore, at least 20% for Tk75-Tk150 crore; and at least 10% for more than Tk150 crore.