DHAKA: The state-owned Janata Bank Limited is going to get enlisted with the capital market under the book-building method for avoiding unwarranted dispute over premium fixing.

Sources in the Securities and Exchange Commission (SEC) confirmed the matter to banglanews Monday.

The SEC Thursday directed the bank for fixing its share price under the book-building method in lieu of fixed rate.

The bank, therefore, will be listed for trading on the share market by issuing Initial Public Offerings (IPO) under the method after completing the procedure.

Managing Director of Janata Bank SM Aminur Rahman told banglanews, “We held dialogues with SEC about entering the market under book-building method.”

“The decision, however, would be finalised in this connection in the meeting of the board of directors on September 23,” he added.

The bank might get Tk 1500 as premium instead of Tk 900, if it comes under the method, he added.

Sources said they applied for issuing 10 million general shares on the market to collect Tk 10 billion. They earlier proposed to issue each share at Tk 100 as the face value of and Tk 900 as premium for collecting Tk 1000 in total, the sources added.  

The IPO processing of the bank was being delayed mainly for the settlement of the increased amount of the premium.

The bank is preparing its detailed report based on its financial statement submitted to SEC in 2008. Later on September 25, an updated statement was also submitted.

Earlier, the board of directors decided to issue shares through IPO on September 2009. ICB Capital Management Ltd is working as the issue manager for listing the bank with the share market.

At present the authorized capital of the bank is Tk 20 billion while the paid-up capital is Tk 5 billion. Income against per share till December 31 was Tk 100.62. Asset against per share was Tk 277.20.

The operating profit income of Janata Bank in 2008 was Tk 7 billion and the net-profit income was Tk 3.19 billion.

On the other hand, total deposit of the bank was Tk 221.33 billion while allocated loan was Tk 144.67 billion. The default loan collection of the bank in 2008 was Tk 9.24 billion.

Janata Bank Limited operates as a state commercial bank. It was founded in 1972 as a result of merger between United Bank and Union Bank. About 13,000 officials and employees are working its 880 branches across the country. The bank turned into public limited company on November 15 in 2007.

Book-building system is a modern method of selling equities when an investment firm seeks bids for a new issue at indicative prices. When the book is complete, it offers prices and sells the lot in a single day.

Underwriters buy all the shares to be floated by public limited companies through competitive bidding procedure under the proposed system. Later the underwriters choose some brokers to put up those shares for selling to retail investors.

The issuers in the book-building system get their share prices from the underwriters who will be the highest bidder in the bidding process.

BDST: 2144 HRS, SEPT 20, 2010