The New Nation - Internet Edition

Staff Reporter

The government has decided to offload 25 per cent shares in the equity market from its 51 per cent stakes in each of the four listed companies by May this year.

An inter-ministerial meeting at the Finance Ministry took the decision yesterday, with Finance Adviser Dr Mirza Azizul Islam in the chair.

Companies, which were earmarked for offloading, are the Osmania Glass Sheet Factory Ltd, Atlas Bangladesh Ltd, National Tubes Ltd and Eastern Cables Ltd.

"The meeting has decided to offload 25 per cent of the Government's 51 per cent holdings in the four listed companies," Dr Aziz told a post-meeting briefing at the Finance Ministry conference room.

The long-awaited announcement was made as a follow-up of the Government action plan decided on August 31, 2005 to increase supply of shares having good fundamentals to the capital market amid short supply of good shares as compared to demand.

The declaration came at a time when many of the market players blamed regulators for creating a liquidity crisis in the market through imposing restrictions on margin loans and taking away huge amount of money by the state-run Jamuna Oil and Meghna Petroleum.

They, however, termed the announcement as good news for the capital market and expressed their confidence that the market has the capacity to absorb the forthcoming shares.

The meeting further decided to re-evaluate the assets of state-owned enterprises under the Ministry of Industries, having 100 percent Government stake by June 30, before going for their listing and offloading 49 percent shares in the market.

It also formed a committee comprising representatives from the Securities and Exchange Commission (SEC), Ministry of Industries, and

Investment Corporation of Bangladesh (ICB) to examine the status of the mostly loss-making state-owned sugar mills.

"The committee will identify by June 30 whether the sugar mills could be listed in the stock market and the shares offloaded," said the Finance Adviser.

About the government stakes in listed companies, mostly multinationals with major shareholding by foreign investors, the meeting observed that offloading of the government shares could not be possible without the decision of the respective company board of directors.

Dr Aziz said the meeting decided to communicate with the Boards about the government decision to offload shares and take decision in this regard followed by the respective board decisions.

Replying to a question, he said the government rejected a proposal from Unilever Bangladesh Ltd to buy the government stake in the multinational company. Instead, the government is now negotiating with the company to offload equal 5 per cent stakes each from the Government holdings and the foreign investor's holdings.

Special Assistant to the Chief Adviser for the Ministry of Industries Mahbub Jamil has been assigned to communicate with Unilever in this regard, he added.

"I think, there's room for more shares to come into the market as prices of existing shares in the market are still on high side with the PER (price-earning ratio) at 23 per cent at present," Dr Aziz, who headed the SEC before assuming the office of Adviser, he further added.

Dhaka Stock Exchange CEO Dr Salahuddin Ahmed Khan said the recent liquidity shortage in the market was a temporary one caused by simultaneous effect of restriction on the margin loans and offloading shares of Jamuna and Meghna shares.

"The market will be able to absorb the new shares unless there is any external shock," he said.

"The timing and price will be the main factors to see whether the market absorbs the shares well," said Yawer Sayeed, managing director and CEO of AIMS of Bangladesh Limited, an asset management company.