Finance ministry suspends order on changing direct listing rules

The finance ministry yesterday suspended its directive that had asked the stock market regulator to change direct listing rules to allow infrastructure-related companies to offload shares.

The move came a day after the Bangladesh Securities and Exchange Commission (BSEC) ordered the Dhaka Stock Exchange (DSE) to halt the process of allowing Best Holdings Ltd to list directly on the bourse.

Listing rules in Bangladesh don't allow private firms to go public through a direct listing. They have to go through the initial public offering process if they want to float shares to raise funds.

The board of the DSE was set to discuss the proposal of direct listing of Best Holdings, the parent company of Le Méridien Dhaka hotel, at a meeting yesterday.

But the stock market regulator on Wednesday evening asked the premier bourse to stop the procedure.

Yesterday, the finance ministry directed the commission and the Bangladesh Bank to stop the process to amend the direct listing rules as it had suggested on September 8 until further notice.

The ministry's move came after media reports regarding a bid by Best Holdings to be listed directly on the DSE to offload 4.35 crore shares worth around Tk 283 crore.

In the September 8 letter, Finance Minister AHM Mustafa Kamal had asked the stock market regulator to speed up the processes of direct listing of infrastructure projects or project-related companies to reduce equity exposure of state and private banks and eliminate risks for them.

The letter, citing a meeting of the minister with high officials of state banks, said Kamal was informed that state banks invested in Bangabandhu-1 Satellite-related company Akash and tourism-related company Best Holdings.

The senior officials of the banks requested Kamal to allow the direct listing of the companies in the capital market, the letter said.

Four state-run commercial banks invested Tk 1,675 crore in Best Holdings through the purchase of placement shares to buy 29 per cent stake in the hospitality company.

Sonali Bank owns 8.83 per cent share, Janata Bank 8.83 per cent, Agrani Bank 6.62 per cent, and Rupali Bank 5.30 per cent, according to a letter of the BSEC to the DSE.

The stock market regulator also asked the bourse to explain why it was going to place the issue in the board meeting although rules do not allow.

The commission also wanted to know whether the investment made by the four state-run banks would be considered as owned by the government.

With the direct listing, investors and promoters can directly sell shares to the general public through stock exchanges.

Best Holdings' sponsors hold 52.01 per cent shares and private placement-holders own 47.99 per cent shares. Among the private placement shareholders, four state-run owned banks own 29.58 per cent of the paid-up capital.