BSEC to raise IPO quota for general investors

Mostafizur Rahman | Published at 11:06pm on January 12, 2021

The Bangladesh Securities and Exchange Commission is going to make some changes, including raising quota for general investors and introducing pre-IPO approval system, in its initial public offering rules.

The BSEC is likely to finalise the changes in a commission meeting today.

A senior BSEC official told New Age that the BSEC had recently moved to offer IPO shares to all applicants.

So, it has become necessary to increase the IPO quota for general investors as their participation is expected to rise significantly due to the facility, he said.

The quota for general investors may be increased by 15 percentage points, the official said.

There are many eligible investors who do not play any role on the secondary market, but take the benefit of the quota facility kept for them in the IPOs, he said.

Besides, a number of eligible investors do not have any operation, he said.

BSEC commissioner Shaikh Shamsuddin Ahmed told New Age that the regulator was trying to make some changes in the IPO rules for the interest of general investors and the betterment of the market.

As per the BSEC public issue rules, the IPO quota for eligible investors, including mutual funds, is 40 per cent and that for general investors, including non-resident Bangladeshis, 60 per cent under the fixed price method.

For book building method, eligible investors, including mutual funds, enjoy 50 per cent quota and general investors, including NRBs, 50 per cent quota.

The commission is also likely to make it mandatory for all IPO intending companies to take pre-approval from the commission for applying for IPOs.

BSEC officials said that the initial approval would cut cost and time for a company which might not be eligible for applying for an IPO.

Companies may not be allowed to apply for IPOs within two years of raising capital through placement shares, they said.