Walton, Berger and ICB struggling after regulatory pressure?
File photo: Discouraged stock investor watches stock prices on screen as DSE
Mehedi Hasan / Dhaka Tribune
Experts refute this claim, however, as more action for the public is always better for the market.
The stock prices of Walton, Berger and the Investment Corporation of Bangladesh (ICB) on the stock exchanges have started to decline since the Bangladesh Securities and Exchange Commission (BSEC) announced that 10% of their shares will have to be offloaded to the market.
The stock prices of the three companies began to decline from last Monday. This free fall continued until Thursday.
According to the Dhaka Stock Exchange, Walton’s share price stood at Tk 1,437.70 on Sunday, after which the stock market closed at Tk 1,206.40 on Thursday. Prices dropped to Tk 231.40 in just four days.
Berger’s share price was Tk 1,921 on Sunday and Tk 1,841.10 on Thursday, a reduction of Tk 79.90.
On Sunday, the ICB share price was 142 Tk, which was sold at 131.50 Tk on Thursday, a decrease of 10.50 Tk.
Dhaka Tribune found that although a 2015 law stated that a company with assets of Tk 150 crore must issue 10% shares in the market by initial public offering (IPO), it was not implemented to date.
When asked why a law promulgated in 2015 had not been enforced for so long, Mohammad Rezaul Karim, executive director and spokesperson for BSEC, told the Dhaka Tribune: “The big companies have asked us to do not include it in the method of building books. But now we have made our position clear on the matter and have asked ICB, Walton and Berger to issue a total of 10% shares in the stock exchanges within the next year. “
These actions must be left at market price and cannot do without more than 1% per month
“Therefore, we have asked ICB, Walton and Berger to issue a total of 10% shares in the Bangladesh capital market within the next year. These stocks must be left at market price and they must discharge more than 1% of the company. actions in a month, ”he added.
Explaining the decision, Shakil Rizvi, director of the Dhaka Stock Exchange (DSE) and also its former chairman, told Dhaka Tribune that transparency is needed everywhere.
Also Read – Walton Profits Double, Declares 250% Dividend
Before the new addition to the book-building method, the activities of the three companies would have encouraged other companies to offload smaller stocks in the market, which would have set bad examples, he also said. .
As many companies as there are, all have at least 10% of the capital market share, but these three companies do not, Rizvi added.
“Another thing that happens when there are weaker stocks in the market, companies tend to dominate a lot. It can inspire stock price manipulators. I think such a move is acceptable to everyone. Moreover, this decision was taken to make the law equal for all “, he added.
Berger Paints Bangladesh Limited currently owns 95% of the shares. The remaining 3.71% is in the hands of institutional investors, foreigners control 0.14% and the remaining 1.15% is in the hands of general investors.
If they want to get rid of 10% of the stock, they have to sell an additional 5% of the stock in the capital market.
When asked when it would be possible to implement the directive and lower the share price, Khandkar Abu Jafar Sadique, secretary general of Berger Paints Bangladesh, told Dhaka Tribune that Berger Paints is a holding company. foreign.
“Therefore, before the implementation of this new directive to release shares in the market, the Bangladesh Bank and other institutions have laws and general issues that need to be revised, which takes a little time. . We have already informed the company directors of this instruction from BSEC, “he said.
Regarding the share price, he also said that it is a normal process for the stock market to go down.
“As we don’t have a bad institutional position, I think the authorities’ announcement is one of the main reasons for the sudden drop. However, I think the share price will return to the uptrend.” Sadique added.
Walton Hi-Tech currently owns 99.03% of the shares held by the sponsoring directors. Foreign investors, institutional investors and investors in general have 0.97%.
Of this total, general investors have 0.48%. Institutional investors have 0.39% and foreign investors 0.10%.
Thus, to reach the 10% target, they must offload an additional 9.03%.
Walton Hi-Tech Industries Ltd Managing Director and CEO Golam Murshed told Dhaka Tribune that Walton conducts its overall business, including business operations, in accordance with capital market rules and regulations.
“We met with the president of BSEC for the benefit of investors in general and the overall development of the market and the country. The sponsor-directors of Walton had a request to increase the free float shares to 5% in the next 3 years The BSEC chairman assured to consider it in the interest of investors and the stock market. “
Meanwhile, company secretary Rafiqul Islam said that according to the rules, managing sponsors cannot get rid of the shares during the blocking period.
However, Walton’s managing sponsors have agreed to unload more shares with special consideration at the request of BSEC and they intend to invest the money received from the unloaded shares in new industries, he said. he adds.
The company currently owns 69.81% of the sponsored directors and 27% of the government.
Here the company holds a share of 96.81%. Institutional investors and general investors hold 3.19%. Of this total, general investors hold 1.35%, while institutional investors hold 1.84%. To fill 10 percent of the shares, the company will have to get rid of an additional 6.81 percent.
Book building is the process by which an underwriter attempts to determine the price at which an initial public offering (IPO) will be offered. The price discovery process involves generating and recording investor demand for stocks before arriving at an issue price.
Fixed price method
In an initial public offering (IPO), if the shares are offered at a fixed price, such an issue is known as a fixed price issue. This is the second preferred method of IPO.
In the offer document, the issuer must properly justify and justify the price set.