Otobi has sought approval for making Initial Public Offerings (IPOs) to collect funds from the market with excess premium, alleged market-related sources.
Otobi, the famous furniture manufacturing company, made the appeal to stock market watchdog – the Securities and Exchange Commission (SEC) seeking its permission for offering primary shares to raise its paid-up capital.
A banglanews24.com report says, the IPO application at present is under consideration of the SEC.
Sources said, Otobi placed the IPO application on April 26 last at the Dhaka Stock Exchange (DSE) but the DSE authority sent it to SEC without scrutinizing.
As per the proposal, the company intended to release 40 million shares in the market with a proposed value of Tk 45 per share, including premium of Tk 35 per share.
In total, the company will collect Tk 1.8 billion from the market, they added.
As per the audit report of the company, submitted at the DSE, Earning Per Share (EPS) was shown Tk 2.93.
Commenting on this, DSE President Rakibur Rahman said: “A company certainly can add premium to its primary shares, but the financial condition of the company must be seen first. On the other hand, charging excess premium discourages the investors and while lower premium encourages them.”
“The company that wants to enter the market with premium can be brought under safety net. This will ensure security of the investors,” he added.
Bangladesh Share Market Investors Oikya Parishad International Affairs Secretary ANM Ataullah said, “We are always against offering shares with excess premium. We learnt that furniture making company Otobi has applied for IPO approval with a premium of Tk 35 per share, which is under SEC’s consideration now.”
In the current market situation, the investors are not ready to accept Otobi’s IPOs with excess premium.
Syhafiullah, a share investor said: “The SEC should not approve proposal of any company who wants to make money with excess premium.”
Source: Daily Sun, 25 August 2012