Star Business Report
The indicative price of LankaBangla Securities shares will be set within the next one week through bidding by institutional investors, as part of the stockbroker’s plan to go for IPO using book building method, officials said yesterday.
At least 15 institutional investors from minimum three sectors, including five merchant banks, will take part in the bidding to determine the indicative price of each LankaBangla Securities share.
Determining the indicative price is a prerequisite for going to discover the share price of a company that intends to go public using the book building method, a modern pricing mechanism for initial public offering (IPO).
Setting the indicative price is also required to obtain regulatory approval at the first stage.
“After getting an indicative price, we will submit the IPO prospectus to the regulator for its consent to go for price discovery,” said Mohammed Nasir Uddin Chowdhury, chief executive officer of LankaBangla Securities.
He was speaking at the roadshow on LankaBangla Securities, arranged for the institutional investors at the Dhaka Sheraton hotel yesterday.
A roadshow is required by the book building regulations before price discovery where a company’s fundamentals are displayed to the institutional investors.
AAA Consultants and Financial Advisers, the issue manager of the LankaBangla Securities IPO, presented the fundamentals of the brokerage firm at the roadshow.
If approved by the Securities and Exchange Commission, LankaBangla Securities will be first listed stockbroker in the Bangladesh market.
The brokerage firm’s existing paid-up capital is Tk 55 crore and will float three crore ordinary shares of Tk 10 each. After the IPO, its paid-capital will reach Tk 85 crore.
Of the three crore ordinary shares, 20 percent or 60 lakh shares will be reserved for the institutional investors, who individually can apply for maximum 10 percent of the 60 lakh shares.
With the IPO proceeds, the company will go for business expansion and diversification such as increasing margin loan facilities, branch expansion, software upgrade and acquiring fixed assets.
A subsidiary of LankaBangla Finance Ltd, the firm will also go for strategic investment in other companies, participate in bond market and effectively activate dealership activities.
The half-yearly earnings per share (EPS) of LankaBangla Securities, the top performer on the two bourses in terms of turnover in the last four years, is Tk 16.20 to June this year.
LankaBangla Securities started operations in the capital market in 1998. Now it has eight branches across the country, and two more branches are in the pipeline.
The stockbroker, which was rated AA2 by Credit Rating Agency of Bangladesh, is a 90.9 percent owned subsidiary of LankaBangla Finance Ltd, a leading listed non-bank financial institution. LankaBangla Finance is engaged in leasing, credit cards, merchant banking, corporate finance and financial consultancy.