IFIC Bank downsizes right share offer

The IFIC Bank Ltd has revised its right share offer plan as the market situation seems less supportive of a huge capital accumulation.

Right shares are new shares that are issued by a company only for its existing shareholders.

In its 757th board meeting on Thursday evening, the publicly listed private commercial bank’s board of directors decided to downsize the right share proposal by offering one right share against four of its existing shares at a rate of Tk10.

Earlier on July 4, in the last Extraordinary General Meeting (EGM) the bank’s shareholders had approved a plan to issue one right share against each existing general share.   

“However, the market condition seems less favourable for accumulating a huge paid-up capital of over Tk1,000 crore through issuance of right shares,” said Md Mokammel Hoque, the company secretary of the IFIC Bank. 

“The bank’s view regarding the situation was in line with the securities regulator and that is why the IFIC board decided to downsize the right offer,” he added.

The IFIC Bank Ltd – which debuted at the Dhaka Stock Exchange (DSE) in 1986 – has grown into a bank with a paid-up capital of Tk1338.74 crore. They have secured a reserve and surplus of Tk872 crore.

As a part of continuous capitalisation to support the growing balance sheet, the bank issued a one-against-one right share in 2017.

The bank has called another EGM to seek shareholders’ approval of the revised right offer plan.  The meeting is scheduled to be held on October 10. 

To identify shareholders eligible for the EGM, the IFIC Bank selected September 16 as record date.

If shareholders approve the new plan, the bank will apply to the Bangladesh Securities and Exchange Commission (BSEC) for right offer approval and, if approved, another record date will be declared to identify shareholders who will be eligible to buy right shares.

At the DSE on Thursday, IFIC Bank shares closed at Tk9.80, below its face value of Tk10 each. The stock witnessed an increase up to Tk16.4 and bottomed at Tk9 in the past 12 months.

The IFIC was set up in 1976 as a joint venture financer between the government and private sector entrepreneurs, with an objective to work as a finance company within the country and setting up joint venture banks and financial institutions aboard.

In 1983, as the government allowed banks in the private sector, the IFIC was converted into a full-fledged commercial bank. The government now holds 32.75 percent of the IFIC Bank shares. 

The directors and sponsors own 8.62 percent of the shares and the rest is held by the general public.

In the first half of the ongoing accounting year (January-June), the IFIC Bank posted an earnings-per-share (EPS) of Tk1.01 against that of Tk0.39 for the same period of the previous year.