Business

Advertisement

 

IFIC Bank’s rights offer rejected as no underwriter found

Staff Correspondent | Published: 11:51, Nov 24,2020 | Updated: 18:02, Nov 25,2020

 
 

The Bangladesh Securities and Exchange Commission has cancelled IFIC Bank Limited’s rights offer proposal due to inability of the bank to appoint an underwriter.

‘The BSEC has regretted the application for the proposed rights issue of the company,’ according to a Dhaka Stock Exchange web post on Tuesday.

IFIC Bank had been struggling with its fresh rights issue plan as the bearish market has kept share prices of the bank below the face value of Tk 10 each.

The bank had planned to mop up around Tk 335 crore from shareholders through issuing right shares at Tk 10 each.

A rights issue is an invitation to existing shareholders to buy more shares at a discount price or lower than the market price, market operators said.

Every new issue has some kind of diluting effect on share prices as a result of a fall in the market price in proportion to an increase in the number of shares, they said.

The bank failed to find an underwriter for its rights offer due to the lower market price of the bank’s shares.

On July 30, the bank revised its rights offer plan for the second time. It had reduced the ratio of right shares to 1R:5 (1 right share for every five shares held) from 1R:1 last year.

Despite raising capital through rights offer in 2017 and bonus shares in every year, the bank had submitted another right offer proposal to the BSEC in May last year to the ratio of one right share against one existing share.

But, observing the investors’ negative sentiment and bearish market trend, the bank had to revise the proposal in August last year and in July this year.

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images