The New Nation - Internet Edition

Staff Reporter

Entrepreneurs under present system are not getting fair price from the capital business as major benefits go to the investors, said Chairman Securities and Exchange Commission (SEC) Faruq Ahmad Siddiqi.

"Book Building Method in IPO will surely benefit big companies as well as would encourage them more to go public," he said while addressing a workshop on proposed new IPO pricing method " Book Building Process" held at the Dhaka Stock Exchange (DSE) yesterday.

According to him, investors in this new system would be encouraged to participate in the secondary market, which would help them to reduce the borrowing cost by the industrialists. But of course the regulatory body will try to create balance among the big, medium and small companies, he said.

He also added that it is the primary stage and comments, views and observations will be taken from different groups.

SEC Executive Director Abdul Hannan Joarder vowed to encourage big companies to go public, fulfilling some requirements.

According to him, companies with paid-up capital of Tk 30 crore and are maintaining steady growth over the last three years as well as have been in operation for the last minimum five years are eligible to go public by following Book Building Method.

There will be an indicative price so that whimsical and irrational price movement due to high demand for the first or second day and then drastic fall cannot happen; and company cannot flee market pushing investors into darkness, he informed.

"A proposition that there will be quota for institutional investors and NRBs," the SEC Executive Director announced.

According to him, institutions shall place their bid with 20 per cent of the amount of bid in advance and the rest 80 per cent shall be paid within two working days prior to general public subscription opens.

Institutions may bid below the floor price but not below the face value of the securities. General investors and NRBs shall buy at Cut-off price, he added.

DSE Senior Vice President Ahmad Rashid Lali, CEO Prof Salahuddin Ahmed Khan, former Chairman of DSE Imtiaz Husain, Metropolitan Chamber of Commerce and Industry (MCCI) President Latifur Rahman and other economistas and experts also addressed on the workshop.