The finance ministry on Thursday issued a notice directing the regulatory bodies not to take any action on the basis of a letter purportedly signed by Finance Minister AHM Mustafa Kamal on Le Méridien Dhaka’s parent company Best Holdings’s bid to enter the bourse to raise Tk283 crore via the direct listing system.
The letter, signed by Kamal’s private secretary Md. Fardous Alom, was sent to the Bangladesh Bank governor and the Bangladesh Securities and Exchange Commission chairman.
The unusual move comes after Best Holdings applied to the stock market regulator and the Dhaka Stock Exchange on November 12 seeking special permission to offload 4.3 crore ordinary shares through a direct listing, for which it is not eligible.
A direct listing is a process by which a company can be listed on a stock exchange without increasing its existing paid-up capital or by issuing new shares. Under the mechanism, a company can join a bourse just by offloading its existing shares to investors.
Earlier in 2016, the BSEC in a regulatory notice directed the twin bourses not to allow any private company to be listed directly. Only the government companies or state-owned enterprises are eligible for this method of listing.
Best Holdings, which has diversified interests ranging from agro-business to infrastructure development, hospitality to advertising, is 70.4 per cent owned by individuals and private entities.
State-run banks Sonali, Janata, Agrani and Rupali collectively own 29.6 per cent of Best Holdings, which is used as the basis for seeking the special treatment.
To support its application, Best Holdings had furnished a letter signed by Kamal on September 8 recommending direct listing for privately-heldinfrastructural development companies and as well as relaxation of certain rules.
Best Holdings was due to get the green light at the 983rd meeting of the board of directors of the DSEon Thursday. But thanks to an extraordinary move by the BSEC, the plan appears to have been foiled.
The securities regulator worked on the Victory Day, a public holiday, and issued a show-cause notice on the DSE backdating it to December 15, officials working on the matter told Dhaka Tribune.
Subsequently, the issue of direct listing of Best Holdingswas dropped from the agenda of the board meeting yesterday, an independent director of the bourse told Dhaka Tribune.
“You are requested to keep this application for direct listing pending till settlement of the total matter,” said the letter signed by BSEC Deputy Director Mohammed Nazrul Islam dated December 15 to the DSE managing director.
Dhaka Tribune has a copy of the letter, in which the securities regulator questioned the authenticity of the letter from the finance minister.
Besides, Best Holdings raised a total of Tk 662.2 crore through private placements between August 2019 and June this year, which goes against the rules for a direct listing.
The company’s plan to offload 4.35 crore shares out of its total of 87.1 crore shares at Tk 65 each does not meet the offloading requirement of 25 per cent of the paid-up capital of the company and price discovery process.
Besides, its current assets from August 2016 to 2019 were reported as negative, which is contrary to provisions of the regulations.
The BSEC is also asked whether the investment made by the four state banks in the equity shares of Best Holdings by way of placement shares can be considered as owned by the government.
RACE Portfolio and Issue Management Company and ICB Capital Management are the issue managers for the direct listing. ARTISAN Chartered Accountants is its accountancy firm.
