IPO subscription norms tightened for EIs

An eligible investor needs a minimum investment of Tk 3 crore in the secondary market to qualify for subscribing to any initial public offering (IPO), says the securities regulator.

The previous minimum investment limit for eligible investors (EIs) was Tk 1 crore.

The move was taken to boost money flow to the ailing stock market, according to officials at the Bangladesh Securities and Exchange Commission (BSEC).

The minimum investment for approved pension funds, recognised provident funds and approved gratuity funds has been set at Tk 1.5 crore, up from the existing Tk 50 lakh.

The BSEC instructed the stock exchanges to recognise provident funds and gratuity funds as eligible investors after assessing their audited financial statements, and bank details.

Currently, the stock exchanges recoginsed the EIs after checking the fund registration certificate issued by the National Board of Revenue.

The regulator took the initiative as it noticed that many eligible investors, who have no apparent role in the secondary market, were enjoying the IPO quota facility, depriving the active ones, said a BSEC official.

Eligible investors, including mutual funds, enjoy a 25 per cent quota in IPOs under the fixed price method and the book building method as per the BSEC public issue rules.

The eligible investors include merchant bankers and portfolio managers, asset management companies, mutual funds, stock dealers, banks, financial institutions, insurance companies, alternative investment fund managers, non-resident Bangladeshis, and other institutions.