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Enhancing liquidity flow: BSEC raises EIs' investment limit

| Updated: May 27, 2022 10:39:34


Enhancing liquidity flow: BSEC raises EIs' investment limit

The securities regulator has taken another initiative to increase liquidity flow in the capital market by enhancing the stipulated investment ceiling, set for availing IPO (initial public offering) quota, by eligible investors (EIs).

The Bangladesh Securities and Exchange Commission (BSEC) has extended the EIs' investment limit in a meeting at the BSEC on Monday.

The BSEC officials said the investment limit has been extended to facilitate sustainability of the market's upward trend.

After sessions of losing 556 points, the DSE broad index - DSEX - advanced 1.93 per cent or 118.86 points to close at 6,261.54 points on Monday, riding on the announcement of extending the tenure and amount of the capital market refinancing fund and increased limit of margin loans.

As per the decision on the day, the EIs, other than the approved pension funds, recognised provident funds, and approved gratuity funds, must have a minimum investment of Tk 30 million in listed securities to avail IPO quota.

The minimum investment will be Tk 15 million for the approved pension funds, recognised provident funds, and approved gratuity funds.

The EIs will have to ensure the stipulated amount of investments in listed securities at market prices within the cut-off date - set for IPO subscription.

The BSEC officials have said the commission has set new investment limits for the EIs to enhance liquidity flow in the market through institutional investors.

As per the existing rules, the approved pension funds, recognised provident funds, and approved gratuity funds will maintain a minimum investment of Tk 5.0 million in listed securities at market prices, and the amount for other Els will be Tk 10 million within the cut-off date.

"The BSEC has extended the investment ceiling for the EIs to facilitate continuation of the market's upward trend," said Mohammad Rezaul Karim, the BSEC spokesperson.

The securities regulator has also said the exchanges' electronic subscription system (ESS) team will examine the approved copy of the revenue board, audited financial statements and relevant bank statements of the approved pension funds, recognised provident funds, and approved gratuity funds in case of being registered with the ESS.

In the meeting, the securities regulator has also approved the proposal of a zero coupon bond worth Tk 2.0 billion - to be issued by Envoy Textile.

The units of the bond will be issued through private placements at discounted rates - ranging from 6.50 per cent to 8.0 per cent.

The company will utilise the fund to purchase machinery and for refinancing loans, among others. The Envoy Textile bond will be listed with the exchanges' alternative trading boards.

The offer price of the bond will be Tk 2.0 million per lot. UCB Investment is working as the bond trustee, while NDB Capital is working as the lead arranger.

The BSEC has also approved another proposal of issuing a Tk 3.0-billion bond by Alif Industries. The bond will also be listed with alternative trading boards.

The company will utilise the fund to acquire another listed company, C&A Textiles, and for repaying its bank loans.

Earlier, the securities regulator allowed Alif Industries to acquire the company.

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