DHAKA, Nov 29: Belying market apprehensions, the initial public offerings (IPOs) of nine companies recently received massive response from the ordinary shareholders, resulting in unprecedented oversubscriptions of the offerings.
In the first five months of the current fiscal, the nine companies offered public share of worth Tk110.51 crore, while they received applications worth Tk2,483.33 crore.
The Securities and Exchange Commission, the market regulatory body, was earlier criticized by some market players for allowing as many as IPOs within a short span of time and they apprehend that the market might fail to absorb consecutive pressure of IPOs.
The market players also apprehended that the SEC’s decision to release so many IPOs might pull the stock market down as the investors would block their money in the primary market.
Ten companies — five from financial sector, three from manufacturing and marketing, and two from information technology — floated their IPOs worth Tk113.51 crore during the first five months of the current fiscal.
The IPOs of all the private commercial banks and financial institutions were oversubscribed by seven to as high as 55 times during the same period.
Against an IPO worth Tk20, the Bank Asia received Tk 1,109 crore as subscription, recording an unprecedented 55 times oversubscription between September 23 and 24, 2003.
Mercantile Bank’s offer was oversubscribed by 36 times receiving Tk781 crore against its IPO of Tk21.31 crore. The IPO was opened for subscription between October 21 and 22, 2003.
Investors came up with Tk330.4 crore for One Bank’s IPO against its offer of Tk19.7 crore, posting almost 17 times oversubscription.
Standard Bank received Tk153.8 crore as subscription against its IPO worth Tk22 crore, oversubscribed by about seven times.
Lafagre Surma Cement Ltd opened its IPO for subscription in the middle of November, has received Tk35 crore in subscription, a 2.33 times oversubscription against its initial public offering of Tk15 crore.
Despite being a green-field company, such a good response against Lafarge’s IPO indicated investors confidence on the primary market, said a market analyst.
Of the two IT firms, the IPO of the Daffodil Computer, however, was under-subscribed in mid-October as the company received Tk3.12 crore as subscription against its IPO of Tk4.5 crore.
Agni System Ltd, another IT company, received Tk15.08 crore in subscription against its IPO of Tk3 crore that posted more than five times oversubscription between July 8 and 9, 2003.
Jago Corporation, a mineral water producing and marketing company of imported water purifying machines, has issued the first IPO of the current fiscal worth Tk2 crore only. Its IPO was marginally oversubscribed and received Tk2.03 crore as subscription between July 6 and 7, 2003.
The IPO of First Lease Company Ltd has received huge response with 18 times oversubscription during July 19 and 20, 2003.