Regulator rejects CDBL's listing plan

Rangpur Dairy gets green light

 The stockmarket regulator scrapped the initial public offering of Central Depository Bangladesh Limited (CDBL), but approved the IPO proposal of Rangpur Dairy and Food Products Limited.

The Securities and Exchange Commission took the decisions at a meeting presided over by its chairman M Khairul Hossain in Dhaka on Tuesday.

The IPO proposal of CDBL that operates electronic share transactions centrally was rejected after the SEC commissioners unanimously reached a consensus that the public offering would be conflicting.

CDBL is a capital market related infrastructure company that operates the Central Depository System (CDS). “If it's listed on the stock exchanges, it may create controversy,” said an SEC official.

“It's also a sensitive company for the market, as all dematerialised or electronic shares are kept with the CDBL,” said Saifur Rahman, the spokesman and an executive director of SEC.

“CDBL is owned by market stakeholders. The company, after growing up in terms of ownership, will give rise to conflict of interests if it is listed on the bourses.”

Considering all these, the commission has decided to cancel CDBL's IPO, Rahman added.

CDBL was formed on August 20, 2000 and was sponsored by state-owned banks, Investment Corporation of Bangladesh, private local and foreign banks, merchant banks, publicly listed companies, insurance companies and Dhaka and Chittagong stock exchanges in collaboration with the Asian Development Bank.

Last week, the country's two bourses also opposed the listing of CDBL saying that the company may become controversial if it fails to safeguard the investors' rights.

Leaders of the twin bourses who also direct CDBL observed that investors' confidence may be misplaced if the company, after being listed, fails to maintain the formalities of a listed company.

CDBL had planned to float 4 crore ordinary shares of Tk 10 each at an offer price of Tk 60.

CDBL in its prospectus said the IPO proceeds will be utilised for general business purposes of the company including funding of continuous upgrading of CDS, buying or constructing a headquarters building if it is financially beneficial to CDBL.

With the SEC's approval, Rangpur Dairy, popularly known as RD Milk, will now float 1.63 crore ordinary shares of Tk 10 each at an offer price of Tk 18.

The commission has allowed Tk 8 as premium per share for the company against its demand of Tk 10 per share.