Bashundhara’s ABG asked to file detailed business plan

The Bangladesh Securities and Exchange Commission (BSEC) has instructed ABG Limited, a sister concern of Bashundhara Group, to submit a detailed business plan as a strategic investor of the Chittagong Stock Exchange.

On Monday, ABG Limited made a presentation before the regulator about its plan at the BSEC Bhaban in Agargaon, Dhaka.

At the meeting, BSEC Chairman Professor Shibli Rubayat-Ul-Islam, ABG Managing Director Sayem Sobhan Anvir and CSE Chairman Asif Ibrahim, among others, attended the meeting.

BSEC Commissioner Shaikh Shamsuddin Ahmed told The Business Post, “We saw Bashundhara's presentation. The company has been asked to come up with a detailed plan. After scrutinizing the plan and considering legal issues, the commission will decide.”

Since 2016, CSE has not been able to find a strategic partner. “We also tried but failed. Hopefully, the company will be good for CSE as a partner,” said the BSEC commissioner.

The Dhaka Stock Exchange is yet to make any satisfactory progress with foreign partners, he said.

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.

The sister concern of Bashundhara Group offers Tk 15 a share, but the CSE’s asking price is based on a 2016 valuation and does not reflect the current market situation.

Taking Tk 15 per share into account, a 25 per cent of CSE stake will cost around Tk 240 crore.

On August 17, The stock market regulator wrote to the CSE to clarify why it has proposed ABG Limited as a strategic investor.

The BSEC also wanted to know the experience and capacity of ABG Limited in the stock business as well as the process of offering a 25 per cent stake in the stock exchange to the company.

Meanwhile, the port city bourse has not submitted any documents to the BSEC showing ABG Limited’s capacity and experience in the capital market.

The CSE did not update the valuation report and mention the share price discovery process either, the BSEC said.

On November 13, 2016, the CSE 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, according to BSEC officials.

ABG Limited is a private limited company that has sufficient resources, adequate manpower, requisite skills, and investment capacity in the security market.

The CSE has been looking for strategic partners from India, China, the United Arab Emirates, and Hong Kong for several years to sell 25 per cent of its own under the Demutualisation Scheme.

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 demutualisation act was passed in parliament in 2013.

To make it a more professional and profitable organisation, the CSE went through demutualisation in 2013, a process that separated its ownership from management.

According to the demutualisation act 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.

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.

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.

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.