a year ago

Grameenphone's IPO: Securing the shared dreams of countless investors

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Mizanur Rahman, a retail investor was struggling as the stock market had been seesawing for a while after he had invested a good amount of his savings in the share market. During that time, the market was plummeting, and the general consensus from all the stakeholders, including investors, regulators, and common people, that a new company should enter the market to rekindle the hope. Amidst the unreliable trends, Mizanur went on looking for a stable financial solution for the next few years until finally, in 2009, there came a breakthrough for the stock markets in Bangladesh with the entry of Grameenphone.

Quite like a textbook example of "Where there is a will, there is a way," Mizanur's will to alter his fortune brought him some Grameenphone shares through the Initial Public Offering (IPO). Later, he purchased a good number of shares, which was perhaps one of the best decision of his life from an investor's perspective. As he kept hold of the shares for a long period of time, the 'blue chip' shares of Grameenphone rewarded Mizanur and many more like him with handsome returns beyond their expectations.

Mobile operator Grameenphone (GP) made its entry into the stock market in a period that was rather despairing for the existing retail investors. There was an unquestioned need for a massive pull-up for the share market. Grameenphone, like a savoir, decided to become a part of the market and share the reputed organisation's value with the public. Grameenphone chose to float 69.44 million IPO shares. They applied on 29 July 2008 in Bangladesh Securities and Exchange Commission (BSEC), and the BSEC approved on August 24, 2009. The Government's approval paved the way for this possibility to bloom, and soon Grameenphone began to break records and create history in the market. Many small and medium investors like Mizanur could finally find an entity they could rely on, afford its shares without much risk, and expect substantial profit within a short time. The wheel of fortune, for countless investors like Mizanur, had begun to spin with a favourable momentum. With a business model to continue operations with governance and ensure shareholding value, maintaining transparency and integrity throughout its value chain, Grameenphone opted to share the company's value with the people of Bangladesh, meaning the people of this nation would be the owners of Grameenphone.

Through this IPO, Grameenphone shared its success with the people, transforming itself into a people's company. With around 50 per cent market share, Grameenphone entered the capital market as the first MNO. This visionary debut itself also stood out as a landmark event in the history of Bangladesh's capital market. Looking back, the scenario in the stock market shifted radically over the past 13 years, overpowering the volatility and other negative influencers. Grameenphone's existence and influence in the market boosted the economy through multi-sector uplift. As the IPO market evolved, GP's IPO soon became an investment opportunity for the common people. There had been a popular phase with GP shares available at Tk 70 (including Tk 60 premium) only, and it became a very hopeful opportunity for those like Mizanur with relatively lesser capital to still become a part of the shared dream.

With multiple milestones in the organisation's arsenal, Grameenphone logged an incredible 1.2 million of total applications, which was the highest ever in Bangladesh's history. It also witnessed the highest amount of subscriptions, reaching  Tk 17,577 million, which was 3.62 times the IPO amount of Tk 4860 million. The total number of shareholders, including sponsors, PPO, and IPO, were 351,199. On the very first day of trading, Grameenphone's shares broke all records, shooting Dhaka Stock Exchange (DSE) General Index up by 764 points, whereas GP shares alone contributed 717 points. Each Grameenphone share opened at Tk 160 and rose as high as Tk 195 on DSE. It closed up 153 per cent at Tk 178.10, compared with the IPO price of Tk 70 each. It brought a landmark rise in key indices, too, on the DSE. The most significant feature is that Grameenphone joined the stock market with the largest-ever issue having 135 million ordinary shares of Tk 10 each. A total of 74,30,400 GP shares worth Tk 1.32 billion were traded on the premier bourse, making the cell- phone operator the top turnover leader on the debut day. Alongside regular profits, Grameenphone has also been facilitating investors through lucrative dividends. This way, Grameenphone's shares became one of the best options, which attracted not just local investors, but foreign institutional investors too.

It has been a journey of more than a decade for Grameenphone in the stock market, preserving the dreams of Mizanur and thousands like him through smooth and transparent market operations. The MNO reported earnings per share (EPS) of Tk 25.28, net asset value (NAV) per share of Tk 36.94, and net operating cash flow per share (NOCFPS) of Tk 42.82 for the year ended on December 31, 2021; as against Tk 27.54, Tk 38.59 and Tk 24.86 respectively for the same period of the previous year. It recommended a 125 per cent final cash dividend for the year ended on December 31, 2021 (total 250 percent cash dividend), including a 125 per cent interim cash dividend, which has already been paid.

According to DSE data projected as of May 31, 2022, Grameenphone's paid-up capital is Tk 13.50 billion, and authorised capital is Tk 40 billion, while the total number of securities remains Tk 1.35 billion. The sponsors own 90 per cent of stakes in the company, while institutional investors own 5.17 per cent, foreign investors own 2.76 per cent, and the general public owns 2.07 per cent. After the listing of Grameenphone, the shareholding percentages were-PPO Investors at 4.86 per cent, and IPO Investors at 5.14 per cent.

For the year 2021, Grameenphone secured total revenues of Tk 143.1 billion, which indicates an annual growth of 2.5 per cent. The MNO's net Profit After Tax for the full year was Tk 34.1 billion, which has indeed played a crucial role in improving the condition of the capital market and mass economy, especially after the damage done by the Covid-19 pandemic. The huge addition to the nation's connectivity partner's income has also been simultaneously beneficial for the national exchequer.

Arif Khan, a former commissioner of the Bangladesh Securities and Exchange Commission (BSEC), noted how the adequately high returns on investment in GP IPOs became a market phenomenon that led people to align their personal growth and vision with that of Grameenphone's. "The entry of Grameenphone into the capital market was a milestone event in the country's capital-market history," he said. "It has enabled the scope of sharing profits for the mass with such a company that is also a household name in the country. People have constantly been benefitted from the GP shares since its launch with cash dividends," he adds, indicating the win-win situation for both sides in the trade.

Grameenphone's IPO has introduced fresh new concepts like informal book building on the capital market. It has revealed how much potential our capital market possesses and thus increased the country's profile in the global context. Previously, there had been a gap in the supply and demand of quality shares on the capital market. Grameenphone's entry and expansion in the capital market with time have reduced this gap.

As the digital connectivity partner and tech service leader in Bangladesh, Grameenphone has been one of the most substantial names among those in the country's premier bourse since its entrance into the capital market. It has held the highest market cap alone since its journey in the public domain commenced with an enlarged vision of sharing the multinational's ownership with the mass people. A responsible business practitioner by principle, Grameenphone's initial vision was to empower societies through connectivity, thus reducing the digital divide. But as demands increased across the country, the need for connectivity transformed in to a shared dream, which inspired the organisation to set foot on the market with initial public offerings or IPOs.

Foreign Direct Investment (FDI) like Grameenphone is creating value and opportunities for local communities with goodwill and brand equity, contributing to LDC graduation and role model in attracting more FDI in Bangladesh.

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