Regulator to probe ADN Telecom's IPO fund utilisation

The stock market regulator has formed a three-member panel to look into the IPO (initial public offering) fund utilisation of ADN Telecom, particularly in land development and investment in Hi-Tech Park.

The panel led by Md Mustafizur Rahman, deputy director of the Bangladesh Securities and Exchange Commission (BSEC), has been asked to complete the probe and submit a report within 60 working days from the date of the issuance of the order on April 13.

The probe body will examine how the company used the funds raised through its IPO, which were meant for business expansion.

An official of ADN Telecom confirmed that they had received a letter regarding the inquiry.

Abul Kalam, BSEC director and spokesperson, said the commission would take regulatory actions as per the securities rules if the enquiry committee found irregularities in IPO fund utilisation.

Following the latest disclosure, the stock of ADN Telecom fell 4.77 per cent to Tk 77.90 per share on Tuesday on the Dhaka Stock Exchange (DSE).

ADN Telecom raised Tk 570 million at the end of 2019 through an IPO under the book-building method to develop infrastructure, establish a data centre and repay bank loans.

Of the IPO proceeds, Tk 326.66 million was allocated for BMRE, Tk 120.60 million for loan repayments, Tk 93.24 million for data centre and the remaining Tk 29.50 million for IPO expenses.

The company was supposed to complete fund utilisation within 24 months on receiving the IPO proceeds. But it could not use up the fund within the stipulated time due to the pandemic and the Russia- Ukraine war.

Later, the company got a two-year time extension until December 2023 and rearranged the IPO proceeds allocated for balancing, modernization, rehabilitation and expansion (BMRE).

As per the revision, ADN Telecom allocated Tk 50 million for land lease and development and invested Tk 50 million in Hi-Tech Park for expansion.

In October last year, it was granted a lease on a portion of land within Kaliakoir Hi-Tech Park for 40 years for setting up IT/ITES devices, software, IOT and Al based electronics service components etc.

Since listing in 2020, ADN Telecom also invested in different companies, including Shohoj, media and healthcare sector as part of its business expansion.

Despite the business expansion, its annual profit plunged 42 per cent year-on-year to Tk 149.5 million in FY24 and it paid a 10 per cent cash dividend for the year, down from 15 per cent for the previous year.

However, its half-yearly profit rose 24 per cent year-on-year to Tk 103 million through December last year, driven by revenue growth of 37 per cent to Tk 893 million.

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