No-lottery IPO system begins with Sonali Life Insurance Co

Staff Correspondent | Published: 23:34, May 06,2021


The distribution of a company’s initial public offering shares on a pro-rata basis instead of lottery will commence with the Sonali Life Insurance Company Limited’s IPO share subscription.

The IPO subscription of Sonali Life Insurance Company will open on May 30 and will continue until June 3, according to the abridged prospectus of the company.

The BSEC on December 9, 2020 allowed Sonali Life to raise Tk 19 crore through the IPO.

On January 20, the Bangladesh Securities and Exchange Commission issued a directive, asking Dhaka and Chittagong stock exchanges to introduce electronic subscription system for application and allotment of shares to the general investors on a pro-rata basis instead of lottery with an effect from April 1.

The IPO share distribution on pro-rata basis system allows every applicant to get shares.

Pro rata basis means assigning an amount to one person according to his/her share/portion of the whole.

This would be calculated by dividing the investment of each applicant by the amount of oversubscription and then multiplying the resulting fraction by the total value of floating shares allotted for the retail investors.

The IPO shares will be subscribed by eligible investors, general investors, non-resident Bangladeshis and mutual funds in accordance with the quotas mentioned in the latest public issue rules.

‘In case of under-subscription under any of sub-categories of eligible investors category or general public category, the unsubscribed portion must be added to other sub-category of the same category,’ Sonali Life IPO prospectus said.

‘In case of over subscription in the general public category, the securities shall be allotted on pro-rata basis, any fraction shall be considered to the nearest integer and accumulated fractional securities shall be allotted on random basis,’ it said.

ICB Capital Management Limited and Agrani Equity & Investment Limited are the issue manager of the company’s IPO.

The regulator also decided that general investors must have at least Tk 20,000 in investment in the stock market to be eligible for participating in any IPO from April 1.

The minimum value of application by a general investor for IPO subscription must also be Tk 10,000.

The authorised capital of Sonali Life Insurance is Tk 100 crore and its pre-IPO paid-up capital is Tk 28.5 crore.

There are 50 life and non-life insurance companies listed on the Dhaka Stock Exchange.

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