Bangladesh Power Development Board (BPDB) has announced selling of 3.43 crore shares from its ownership in the state-owned listed company Power Grid Company of Bangladesh (PGCB).
As the corporate sponsor of PGCB, the BPDB will offload these shares within the next 90 working days.
The BPDB has got approval from the finance ministry to offload a total of 6,87,06,881 PGCB shares. But it will now sell half or 3.43 crores of the total number.
It will sell the remaining number of shares in another phase, officials said.
Company sources said if BPDB sells all its shares at a time, it might put a negative impact on the price of PGCB shares in the market. This is because the BPDB has decided to sell half of the shares in the first step.
As part of its plan to offload shares from state-owned companies for increasing general investors' participation in the capital market, the BPDB is selling its shares from PGCB.
Earlier this year, the government decided to bring the profit-making state-owned companies into the capital market and offload more shares from the existing state-owned companies for general investors.
Though no state-owned companies, after this decision, have yet got listed with the capital market, the finance ministry approved to offload shares of the listed PGCB only.
PGCB sources said its corporate sponsor BPDB will sell its 3,43,53,440 shares from the company in the next 90 working days. Currently, BPDB holds a total of 60,32,59,748 shares in the PGCB.
In the stock market, the latest trading price of PGCB share stood at Tk43 per share on Monday, up Tk1.5 or 3.61% compared to the previous trading day.
Md Jahangir Azad, company secretary of PGCB told The Business Standard, "The sponsor of the company will offload their shares in two phases. If the market condition remains well after the first-phase sale, they will announce the second-phase selling. The shares will be sold taking the current price of the company's shares as a benchmark."
The Power Grid Company of Bangladesh, a subsidiary of the Bangladesh Power Development Board, got listed with the capital market in 2006.
The investors hold 15.36% of 71,27,26,991 shares of PGCB.
In order to help increase general investors' shares in the company, the BPDB decided to offload its 9.64% shares from the company.
In last October, the BPDB got approval from the finance ministry to offload 6,87,06,881 shares from PGCB.
After getting nod for offloading shares, the BPDB again sent a letter to the finance ministry seeking exemptions from some conditions as per the Securities and Exchange Commission Rule 1995.
There is a barrier on buying, selling, or transferring shares of a company prior to the decisions of the company's board of directors held before two months of ending the company's annual statement.
The BPDB in the letter sought exemption from this condition. It also requested for increasing the time-frame to 90 working days for implementing the offloading process instead of the existing rule of 30 days.
According to the Securities and Exchange Commission Rule 1995, a company has to offload its shares within 30 working days after getting approval.
As of November 2020, the sponsors and directors represented 84.64% of PGCB's all shares. Of them, 15.36% are in hands of sponsors— 12.19% in hands of institutional investors, 0.14% in hands of foreign investors, and 3.03% in hands of general investors.
The state-owned PGCB is making profits on a regular basis. In the fiscal year 2019-20, it made a Tk317 crore as net profit, which was Tk383.99 crore in the previous fiscal.
The current earnings per share (EPS) of the company is Tk4.45.
PGCB received government contributions in its infrastructure developments over years and that resulted in more than Tk4,000 crore in share money deposits from the BPDB, which needs to be converted into equity ultimately.
But, as the government and the company preferred the conversion at face value instead of following market price benchmark, like other listed companies do, general investors fear excessive dilution of company assets and earnings.
The debate is still going on in the stock market.
In September 2019, the Bangladesh Securities and Exchange Commission (BSEC) gave consent for raising the paid-up capital of PGCB from existing Tk460.91 crore to Tk712.72 crore through issuing of 25,18,14,000 ordinary shares of Tk10 each to Bangladesh Power Development Board (BPDB) in non-cash consideration against Vendor's Agreement.