Govt extends IPO quota facility for one more yr

Small investors affected in 2010-11 market debacle will continue to enjoy it until June 30, 2019


FE Report | Published: July 16, 2018 11:16:16 | Updated: July 18, 2018 10:39:16


The government has extended the IPO quota facility for one more year to June 30 next year for the small investors, who were affected by the capital market debacles in 2010-11.

The finance ministry issued a notification in this regard on Sunday, a joint secretary of the Financial Institutions Division told the FE.

He said the Bangladesh Securities and Exchange Commission (BSEC) had proposed for the extension of the facility until June 30, 2019.

It has so far been extended for six times since the inception and the latest one expired on June 30, 2018.

The small investors are enjoying 20 per cent quota in the initial public offerings (IPOs) since introduction of the facility in March, 2012.

Generally, the IPO shares are traded comparatively at higher prices on the secondary market than their issue prices due to unusual attraction of a section of investors to that scrip in first few trading sessions.

The quota facility allows the affected investors to make some profit.

"We sent a letter to the finance ministry to allow continuing with the facility for one more year to June 30, 2019," an official at the BSEC said.

The government had announced a special package for the capital market investors, including 20 per cent quota facility in IPOs for fiscal year (FY) 2012-13, for the small investors to help them mitigate the losses due to the debacle.

The BSEC had also declared a stimulus package for short, medium and long terms.

The government formed the Tk 9.0-billion fund in July 2013 to prop up the capital market, and mitigate the sufferings of investors, affected during the 2010-11 stock market debacle.

Later, ICB was appointed as the fund manager. The central bank disbursed Tk 9.0 billion by three installments against the fund.

The total capital market refinancing fund has already been disbursed, according to the Financial Institutions Division.

The government recently reduced the interest rate on loans to 6.0 per cent from 7.5 per cent under the refinancing scheme.

At least 960,000 investors were affected by the debacle, according to a BSEC report on the 2010-11 market crash.

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