The Bangladesh Securities and Exchange Commission on Tuesday granted Runner Automobiles Ltd permission to set the cut-off price of its shares through completing electronic bidding under the book building method of initial public offering.
The commission at a meeting, which was presided over by its chairman Md Khairul Hossain, gave the permission to the company which aims to raise Tk 100 crore through IPO.
Under the electronic bidding process in which only the institutional investors participate, the cut-off price of the shares of an IPO-seeking company is set based on the bids submitted by the investors.
Although the institutional investors are supposed to purchase shares of that company at the cut-off price, the individual investors get scope for purchasing the scrip at 10 per cent discounted price through IPO.
Runner Automobiles will use the IPO proceeds for research and development, purchase of machinery, repaying bank loans and meeting expenditure for IPO process.
The company’s weighted average earning per share was Tk 3.31 and net asset value per share Tk 55.70 (including reevaluated reserve) and Tk 41.49 excluding reevaluated reserve.
IDLC Finance Ltd is the issue manager for the company’s IPO. The BSEC at the meeting also changed the wording of a notification related to mandatory shareholding by the sponsor-directors of a listed company.
The notification was issued in 2011 with a view to checking share sale pressure from the sponsor-directors after the market crash in 2010-2011 but it virtually failed to support the capital market due mainly to inadequate regulatory tools to take punitive measures for violation.
The notification asked all sponsor-directors of a company to hold 30 per cent shares of the entity for at least three years after issuing shares to public.