Trading of Union Bank Ltd, a fourth generation private commercial bank, was halted at the upper limit circuit breaker after a few minutes of debut trading on Wednesday.
The bank's share price closed at Tk 11 each on the Dhaka Stock Exchange (DSE), rising 10 per cent, the highest allowable limit on its issue price of Tk 10 each.
A total number of 58 trades were executed with the trading volume of 40,265 shares with turnover value of Tk 0.44 million on the DSE.
On the Chittagong Stock Exchange (CSE), the bank's share also rose 10 per cent to close at Tk 11 each. Some eight trades were executed with 2,490 shares changing hands on the CSE.
Despite the high demand from investors, prices of the bank shares could not go up further due to regular circuit breaker from the first trading day of the new issue.
Market analysts said the investors showed their appetite for the new issue amid short-term speculation, so it created an 'irrational hype' among investors on the debut trading day.
The bank's shares were halted within a few minutes of trading as investors rushed to buy its shares, but no sellers were seen on the trading board, said a leading broker.
Most of the initial public offering (IPO) shareholders were unwilling to sell their stakes hoping for higher profit in future, he said.
The bank, which received regulatory approval from the Bangladesh Securities and Exchange Commission on September 5, 2021, raised Tk 4.28 billion from the capital market.
The bank offloaded 428 million ordinary shares at an offer price of Tk 10 each under the fixed price method.
Each general investor received a minimum 792 shares of Union Bank under the pro-rata basis while non-resident Bangladeshi investors got 537 shares against application of Tk 10,000.
The investors applied for 3.62 times higher applications than the IPO shares offered by the company, according to the DSE.
Union Bank's IPO is the largest IPO in the banking sector till date. Among all sectors, it will be the fourth largest IPO after Robi Axiata (Tk 5.23 billion), Grameenphone (Tk 4.86 billion) and MJL Bangladesh (Tk 4.60 billion), according to DSE data.
The bank will utilise the IPO proceeds for purchasing government securities, investing in stock market, financing in SME and other projects and IPO expenses.
Profit after tax of the bank stood at Tk 1,219.58 million and basic EPS of Tk 2.18 for the nine months for January-September 2021, as against profit after tax of Tk 1,157.56 million and basic EPS of Tk 2.07 for the same period of the previous year.
However, post-IPO EPS would be Tk 1.24 for nine months for January-September 2021 ended on 30 September 2021.
The pre-IPO net asset value (NAV) per share would be Tk 18.52 as on 30 September 2021 and the same would be Tk 14.82, considering post-IPO paid up shares.
The bank's post-IPO paid-up capital is more than Tk 9.86 billion and authorised capital is Tk 10 billion, while total numbers of shares is 98.69 million.
Prime Bank Investment and BRAC EPL Investments are jointly working as the issue managers of Union Bank's IPO.
As per the bank's draft prospectus, S Alam Group is the owner of the bank, and most of the directors are from the same business group.
Incorporated in 2013, the Union Bank provides all kinds of commercial banking services.