Initial Public Offering (IPO) subscription of Hamid Fabrics begins today under newly introduced method that came into effect from July 15 last.
The company is the first in offering issues under the new method that is expected to cut down the processing time to three weeks from existing more than five weeks and to save a substantial amount of money on the expenses for IPO.
Investors will be allowed to submit their IPO applications through designated brokerage firms 174 from the Dhaka Stock Exchange while 73 others from the Chittagong Stock Exchange along with 37 merchant banks.
Under the new system, retail investors will have to apply for IPO shares allotment through their respective brokerage firms and merchant banks, and deposit money to their beneficiary owner’s (BO) accounts.
However, the existing method will also remain effective for the non-resident Bangladeshis and foreign investors and the Bangladeshi nationals will have both the two options to choose between the two methods.
As per the present procedures, investors need to submit money with their applications for IPO shares to their respective bank accounts for which they have to waste hours, standing in queues. The company’s IPO subscription will be closed on October 2 for Bangladeshi nationals while October 11 for non-resident Bangladeshis.
The textile company will raise Tk105 crore from public. Using the fixed price method, it is set to float 3 crore ordinary shares of Tk10 each at an offer price of Tk35, including Tk25 as premium.
The IPO proceedings would be used for Hamid Fabrics’ existing bank loan payment and business expansion.
The company’s five-year weighted average earnings per share, as of June 2013, stood at Tk2.97 while the net asset value per share is Tk41.14 after revaluation.
According to new method, an individual will have to convey his/her wish to participate in the IPO in a prescribed paper or electronic form to the stockbrokers or merchant banks with whom a beneficiary owner’s account is maintained.
The form should contain the customer ID, name, BO account number, number of securities applied for, total amount and category of the applicant.
Money will have to be available in the customer’s account; no margin facility, advance or deferred payment will be allowed for IPO subscription.
After verifying the availability of the fund, the stockbroker or the merchant bank will block the amount equivalent to the application money and accumulate all the applications or instructions received up to the subscription closing date.
Meanwhile, the stockbroker or the merchant bank will have to maintain a separate bank account for the IPO purpose, where the blocked amount will be deposited.
In case of applications submitted by the stock-dealer or the merchant bank’s own portfolio, the application amount should also be transferred to this account.
