BSEC to scrutinise aggressive IPO bidding

Aggressive bidding in initial public offerings (IPO) under book building method has long been facing questions about whether the local eligible institutional investors are responsible and qualified enough to explore the right price of securities.

In a bid to deter the irrational pricing of primary shares, the securities regulator Wednesday announced that it would ask the institutional investors who had bid aggressively in the IPO of Energypac Power Generation Ltd.

The investors who had bid above Tk60 for each Energypac share will have to explain if they had complied with the regulator's directives issued in February 2018. The directives tried to limit bidders within a reasonable price range.

Enegrypac ultimately secured Tk35 as the cut-off price for its primary shares in which the allocation for institutional investors has been absorbed and general investors will apply to buy the company shares at Tk31 — at a 10% discounted rate.

The Bangladesh Securities and Exchange Commission (BSEC) in a press statement after its 745th commission meeting Wednesday also said that bids in the recent IPO of local electronics giant Walton Hi-Tech Industries would also be scrutinised while bidders would be called for providing explanations and unsatisfactory explanations would face the music.

Walton issued less than 1% of shares in its IPO and a large number of bidders were nervous that they might miss the boat.