The Bangladesh Securities and Exchange Commission on Wednesday waived 26 insurance companies from the rules of mandatory capital raising of minimum Tk 30 crore through fixed price method of initial public offering.
A BSEC meeting, presided over by its chairman Shibli Rubayat Ul Islam, gave the waiver on Wednesday, a BSEC press release said.
It said that the regulator made the decision following a proposal of Insurance Development and Regulatory Authority to seek exemption from the minimum capital raising rules of the BSEC.
As per the new public issue rules, company must raise at least Tk 30 crore under the fixed price method of IPO.
But, the commission allowed the insurance companies on the day to raise minimum Tk 15 crore or more through IPO fixed price method.
BSEC officials said that most of the 26 companies had small paid-up capital and could not float 3 crore shares after maintaining 30 per cent of joint shareholding rules.
In September last year, finance minister AHM Mustafa Kamal warned that licences of unlisted insurance companies would be cancelled if they did not get listed on the share market within three months.
Out of the 78 insurance firms operating in Bangladesh, 30 are still out of the capital market.
The commission at the meeting also allowed Dutch-Bangla Bank Limited to float non-convertible floating rate subordinated bond worth Tk 500 crore and also permitted Aamra Networks Limited to float non-convertible zero coupon bond worth Tk 100 crore.
The DBBL’s bond will be fully redeemable in 7 years.
Coupon rate of Aamra Networks is 8.68 per cent to 9.73 per cent.
The face value of each unit of DBBL’s bond is Tk 1 lakh and that of Aamra Networks bond Tk 1 crore.
Only banks, financial institutions, corporate institutions and other eligible investors will be allowed to subscribe the bonds through private placement.
DBBL would utilise the proceeds of the bond to strengthen tier-II capital base while Aamra Networks would use the fund in implementation of a new project, loan repayment and working capital requirement.
Green Delta Insurance Company acts as trustee and Standard Chartered Bank as mandated lead arranger of DBBL’s bond while Prime Bank Investments acts as trustee and Lanka Bangla Investments Limited as lead arranger of Aamra Networks bond.
The bond of DBBL must be listed on alternative trading board.
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