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General investors’ IPO spree goes on

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Public subscriptions of the newly-approved companies are witnessing a huge response, as general investors still prefer the primary market for risk-free investment amid volatility in the secondary market, officials said.

Latest data reveals that three companies that completed public subscription this year were hit six to 44 times than their Initial Public Offering (IPO) size.

The officials involved with the opening of BO (beneficiary owner’s) accounts said more than 95 per cent of fresh accounts are being opened to participate in the IPOs only.

More than 61,000 BO accounts were opened in January. On Thursday (March 6) the number of accounts stood at above 2.91 million, which was 2.85 million on January 30, 2014.

Matin Spinning Mills completed its public subscription from January 26 to February 08, and the company’s subscription was hit more than six times than the IPO size.

On the other hand, the public subscriptions of Emerald Oil Industries and Hwa Well Textiles (BD) were hit 44 times and 44.05 times respectively than their IPO sizes.

Market insiders said in some cases the IPO-seekers maintain several BO accounts to participate in public offerings.

Md. Moniruzzaman, managing director of IDLC Investments, said a special segment of investors make investment through IPOs, considering these risk-free.

“Most of such investors do not invest in the secondary market, as normally there is no scope of loss in the primary market.”

He said investors prefer the IPOs of those companies that go public without claiming any premium in offer price of their shares. Because there is very little possibility of falling market price of those shares below face value.

“Around 95 per cent of fresh investors, who are opening BO accounts, participate in IPOs. Such investors normally do not participate in the secondary market,” said Golam Rabbani Hamidi, manager and compliance in-charge of Modern Securities.

Public subscriptions of nine companies were completed in last nine months of 2013, and those companies received around Tk 50 billion against IPO size of Tk 5.73 billion.

Presently 40 companies are in the pipeline to go public, and the securities regulator is approving two IPOs every month.

Public subscriptions of Far Chemical Industries, The Peninsula Chittagong and Shahjibazar Power Company will start on March 10, March 30 and April 6 respectively.

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Report: Mohammad Mufazzal
Source: Financial Express

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