The New Nation - Internet Edition

BSS, Dhaka

The Initial Public Offering (IPO) of the country's prime cellphone operator, Grameenphone (GP), will increase the supply of good shares, bring in large investment and raise the confidence of the investors, Stock Market experts yesterday said.

They also believe that the IPO will encourage some other big companies to offload their shares, which will reduce the gap between supply and demand for good primary shares and will eventually make the market more stable.

Talking to BSS, they further said that this kind of IPO would establish strong relation between corporate and public that would ultimately benefit the both sides.

Grameenphone on Thursday got nod from the Securities and Exchange Commission (SEC) to enter the share market with IPO of Taka over 486 crore, the biggest ever public offer in the country's share market.

The investors will have to pay Taka 70 for a share with a face value of Taka 10 as the IPO will be offered with a premium of Taka 60.

"Approval of Grameen IPO will not only help the supply side constraints, it will invite more similar companies getting listed and improve capacity of the local market operators", Mamun Rashid, a leading banker and financial analyst said.

Rashid, also the CEO of the US-based Citibank NA in Bangladesh, said the IPO would also ensure more transparency and governance in the market, which in return would make the entire market more attractive'.

Mamun said the country's stock market was getting overheated, as some investors were not aware enough in making their investment decision. "The corporate governance is also relatively poor when flow of blue chips is far below the demand," he added.

He said big IPO like GP's one would help shimmer off the market when a good number of investors would shift their investment focus on good primary shares from the overpriced secondary market.

"The GP IPO will certainly bring some good impact on the market, but there is no reason to be over ambitious," said Syed Mahbubur Rashid, a share market analyst.

He pointed out that the mobile phone market is now highly competitive and any company should make innovative offer to have its strong footing at the market and make good profit.

He, however, said that the 10 percent tax deduction that the Grameenphone would get after offering the share would give the company an extra competitive edge in making good offers to its clients and making additional profit.

He admitted that the biggest ever IPO of the country would stable the market, bringing balance in between the demand and supply of primary shares.

Yawer Sayeed, Managing Director and CEO of a leading asset and investment management company, AIMS of Bangladesh, also expressed high hope on the positive impact of the GP IPO.

"Share investors have been waiting for a long time for a IPO like Grameenphone. This will increase inflow of good primary shares and thus will meet the demand for good primary shares", Sayeed, also a share analyst said.

He believes that the IPO would take share market one-step ahead as this would help increase investors' confidence.

"This IPO will also absorb the pressure of the high demand, which the country's secondary market has been experiencing for a while in absence of good primary offer," he said.

The other mobile phone operators of the country, however, want to observe the offer of the Grameenphone before making their decision on entering into the share market.

"The five other mobile phone operators of the country are not in a position to enter the share market, but we hope the government will take further steps to create a situation so that they can offer shares like Grameenphone," said Zakiul Islam, President of Association of Mobile Telecom Operators of Bangladesh (AMTOB).

Like the analysts, small share investors are also hopeful about the GP IPO.

"We want good primary shares like GP," Kazi Razwan Faysal, a share investor said. Faysal, who also works at the research department of an investment company, said the country's share market would really be a strong one if some other company like Grameenphone would offer their shares.

Lubana Karim, a housewife and a share investor, said that she only invests in the primary shares and is planning to apply for GP shares. "I have some savings that can be invested in the share market if I see good companies are offering shares regularly," she added.