The Bangladesh Securities and Exchange Commission (BSEC) has approved the Chittagong Stock Exchange’s proposal to sell 25 per cent of its share to ABG Limited, a sister concern of Bashundhara Group, as a strategic investor.
The stock market regulator gave the approval at a commission meeting held in Dhaka on Wednesday. The BSEC chairman, Professor Shibli Rubayat Ul Islam, presided over the meeting.
The BSEC said ABG Limited is offering Tk 15 for each share; therefore the 25 per cent stake will cost around Tk 240 crore.
Earlier, ABG Limited submitted a proposal to the CSE to become its strategic partner. The CSE sent the proposal to the BSEC on August 1.
As per BSEC’s conditions, the port city bourse’s shareholders must be approved at an Extraordinary General Meeting (EGM). Getting approval from the general shareholders is mandatory for selling shares to strategic partners.
Soon after declaring approval from the shareholders, the CSE management will submit the proposal to BSEC for approval.
The regulator also granted approval on the condition that ABG Limited provides technical assistance in order to develop the CSE portfolio.
Speaking to The Business Post, CSE Chairman Asif Ibrahim said, “The CSE will go a long way through gaining ABG Limited as a strategic partner. This will elevate the bourse to a new height soon.”
Earlier, on August 29, ABG Limited made a presentation before the regulator about its plan at the BSEC Bhaban in Agargaon, Dhaka.
Chairman Professor Shibli Rubayat-Ul-Islam, ABG Managing Director Sayem Sobhan Anvir, and CSE Chairman Asif Ibrahim, among others, attended the meeting.
As per the valuation report prepared by KPMG based on the CSE’s financials up to 2016, the indicative value was Tk 11.75 per share according to the discounted cash flow method, Tk 11.04 per share according to the price-to-earnings ratio, and Tk 28.87 per share according to the price-to-book ratio.
On November 13, 2016, the port city bourse published an invitation to submit an expression of interest to be its strategic investor in only one newspaper.
In this connection, the CSE has been requested to explain its position regarding the preliminary scrutiny, selection, and assessment of the bidding process while considering the expression of interest for selling shares to the proposed strategic investor, as per BSEC officials.
ABG Limited is a private limited company that has sufficient resources, adequate manpower, requisite skills, and investment capacity in the security market.
After the 2010 stock market crash, stakeholders demanded the government ensure monitoring to stop manipulation and bring transparency to the market to restore investors’ confidence. Following the demand, the demutualization act was passed in parliament in 2013.
Intending to become a more professional and profitable organisation, the CSE went through a demutualisation in 2013, a process that separated its ownership from management.
According to the demutualization act of 2013, 40 per cent of the CSE’s shares were credited to its members’ accounts while the remaining 60 per cent were kept in a blocked account.
Of the 60 per cent, 35 per cent would be offered in an initial public offering by the exchange, while the remaining 25 per cent would be held by the strategic investor.
In September 2018, the much-anticipated strategic partnership agreement between the Dhaka Stock Exchange (DSE) and the Chinese consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange came into effect.
The DSE authorities handed over 25 per cent of their shares to the consortium, which paid Tk 947 crore.
The CSE began its journey in 1995 in Chattogram through the open outcry trading system. The fully automated bourse is the first to introduce an online trading system in Bangladesh.
As of June 30 of FY21, the CSE’s net profit was Tk 28.34 crore, which was Tk 31.88 crore in the previous year. It has paid a 4 per cent cash dividend to its shareholders for the financial year 2020–21.
At the same time, its earnings per share (EPS) were Tk0.45 and its net asset value per share was Tk11.75. It has a paid-up capital of TK 634 crore and assets of Tk 802 crore, according to last year’s financial report. Equity securities and mutual funds are mainly traded on the stock exchange.