The state-run Investment Corporation of Bangladesh (ICB) will invest at least Tk 15.0 billion afresh in listed securities to boost the country's capital market.
The investment will be made in line with the conditions of Bangladesh Securities and Exchange Commission (BSEC), set with its approval to ICB's proposal of issuing subordinate bond.
The securities regulator has set the condition under Section 2CC of Securities and Exchange Ordinance, 1969.
BSEC officials said the capital market will get a good thrust following ICB's investment of the said fund in listed securities.
On July 17, BSEC approved the ICB's proposal of raising fund amounting to Tk 20 billion through issuing non-convertible fixed rate subordinate bond.
As per the BSEC approval, the bond was supposed to be issued to institutions, other than the existing shareholders of ICB.
Later, ICB made the plea of issuing the bond to its existing corporate shareholders along with other institutions.
On Thursday, the securities regulator approved the ICB's proposal of issuing the bond to its corporate shareholders and other institutions as well.
As per the approval, ICB will have to invest at least Tk 15 billion, which is 75 per cent of Tk 20 billion to be raised through issuing the subordinate bond.
Mohammad Saifur Rahman, a BSEC executive director, said ICB has liquidity shortage due to reduced single party exposure to market.
"That's why the securities regulator has approved its proposal to ensure a good fund flow for the capital market."
In his reply to a question regarding full investment of Tk 15 billion in listed securities, Mr. Rahman said ICB will submit compliance report in this regard from time to time.
Meanwhile, Bangladesh Bank has exempted all scheduled banks from the condition of maintaining exposure limit in case of their investment in the ICB bond.
The central bank has offered the facility to facilitate the state-run corporation's fund raising initiative.
As a result, the banks' investments made in the ICB bond will not be calculated in their exposure limit.
ICB Managing Director Kazi Sanaul Hoq said their bond will be a gift for the capital market.
"The Tk 20-billion fund is likely to be raised within two weeks. The market will get a great support from the bond," Mr. Hoq said.
He also said the fund, received by Dhaka Stock Exchange (DSE) shareholders from a Chinese Consortium, will also be gradually invested in the capital market.
The DSE shareholders received Tk 9.62 billion from the Chinese strategic partner by selling 25 per cent of the exchange's stake.
The shareholders earlier made the proposal of investing their fund in the capital market, subject to waiver of capital gain tax.
On September 13, Finance Minister A M A Muhith declared the reduction of capital gain tax to 5.0 per cent from the existing 15 per cent. To avail the facility, the DSE shareholders will have to submit their specific investment plans.
At Thursday's meeting, BSEC also approved two other proposals of issuing subordinated bonds by IDLC Finance and Trust Bank.
As per the approval, Trust Bank will raise Tk 5.0 billion capital through issuing floating rate non-convertible subordinated bond to strengthen its capital base.
Besides, IDLC Finance will issue floating rate non-convertible fully redeemable subordinated bond worth Tk 1.0 billion. The company will raise the fund to strengthen its capital base under Tier-II.
The securities regulator also approved the draft prospectus of Vanguard AML Growth Fund on Thursday.
The initial size of the fund will be Tk 100 million, of which Tk 90 million will come through sale of the fund's units. The sponsors will contribute the remaining Tk 10 million. The offer price of the units of the fund will be Tk 10 each.
