Raise capital from stock market

Dhaka Stock Exchange (DSE) yesterday urged Bapex, the petroleum and oil exploration division of Petrobangla, to raise capital from the stock market through an Initial Public Offering (IPO) and use the money raised for gas exploring activities.
It is often seen that Bapex's mother company Petrobangla invites international oil and gas companies for gas exploration in Bangladesh. This is because Bapex does not have enough funds to do the job by itself, said Salahuddin Ahmed Khan, chief executive officer of DSE.
“Bapex can do the job by itself through raising fresh funds from the stock market through an IPO and we hope Bapex will do it in future,” he said.
The CEO's plea was made following the mild response, a month back, to the country's first offshore bidding process. In May this year, only six international oil and gas companies submitted their bids for offshore gas exploration in Bangladesh.
The chief executive officer of the country's premier bourse was addressing a gathering on 'projection meeting for Titas Gas and Distribution Company' in Dhaka. Titas Gas, the largest-ever public issue in the history of the country's stock market, will make its debut on bourses on July 2.
M Tamim, special assistant to the chief adviser, said the stock market should ideally be a place to raise capital for industrialisation. “But, our stock market does not reflect that. Ninety five percent of our industries are built based on bank loans,” he said, urging the entrepreneurs to raise funds from the stock market for industrial purposes.
Regarding Titas Gas, he said listing of Titas on the stock market will not only establish an accountability in the state-run organisation, but will also ensure direct public participation in the company.
“We urge the prospective public shareholders of Titas to create a pressure on the company so that it can improve its efficiency,” he said.
He also said Titas is aiming to cut its system loss to below one percent from the existing three percent in the next one and half years. It was six to seven percent, just two years back.
Regarding the recent stock market trends, the special assistant said the market is growing fast, but any uncontrolled growth may lead to a collapse.
Mohammad Mohsin, secretary of the Power, Energy and Mineral Resources Division, Faruq Ahmad Siddiqi, chairman of Securities and Exchange Commission (SEC), Jalal Ahmed, chairman of Petrobangla, and Abdul Haque, president of DSE, also spoke at the meeting.
The state-run gas company will join the country's two bourses under direct listing rules with an offloading of shares worth Tk 214.11 crore, which is 20 percent of its paid up capital of Tk 856.47 crore.
The face value of each Titas share is fixed at Tk 100. As on June 2007, earning per share (EPS) of Titas Gas was Tk 539. The current EPS stands at Tk 30.07 following the enhancement of the company's paid up capital to Tk 856.47 crore in April of this year, up from Tk 238.88 crore as on June 2007. The authorised capital of Titas amounts to Tk 2000 crore.
Titas, which distributes gas in Dhaka and the greater Mymensing region, will be the fifth state-run company to be listed on the stock exchange, under direct listing rules.
Earlier, Jamuna Oil Company and Meghna Petroleum, each offloaded 30 percent of its shares in January this year, and Dhaka Electric Supply Company and Power Grid Company Bangladesh shed 25 percent shares each in 2006.
Under the direct listing rules, trading of Titas shares will be held in spot market up to 12 noon for the first two working days. The first ten minutes of the initial trading day will be considered as the price building period and thereafter from the 11th minute the ICB Securities Trading Company will start selling it at the best market price.
Trading will remain closed on the third day to allow the market to distribute the shares traded on the first two days.
Investors will be allowed to place an order for a minimum of 50 and a maximum of 1000 shares for each order, for the first 5 trading days. No investors will be allowed to sell shares in the first two days.
The first two day's spot market will not be included in the index. After the first two days spot trading, the company will be traded in the public, odd and block market with normal trading hours and be included in the index.
The circuit breaker and circuit filter will remain open for the first 5 days.