Express Insurance to hold first virtual IPO lottery

Express Insurance Limited is going to hold the first virtual Initial Public Offering (IPO) lottery on upcoming July 23.

However, it is subject to the approval of the Bangladesh Securities and Exchange Commission (BSEC).

The issue manager sources said the company applied to the securities regulator for a virtual IPO lottery. The investors have deposited around Tk158 crore in IPO to the company, which was six times of its rising target.

On the other hand, BSEC sources said the matter of holding the virtual lottery will be tabled at the next regular meeting of the commission.

If the commission approves the proposal, the company will be able to arrange the virtual lottery for the first time.

Earlier, the company completed its subscription within June 14 to July 2.

For the outbreak of Covid-19, the company could not complete its subscription on time. Thereby, the subscription was extended with the securities regulator's approval.

The company's IPO subscription date was set on April 13. But it could not receive applications on that day due to general holidays.

Express Insurance secured approval from the BSEC to go public with a condition to invest at least 20 percent of its IPO fund in the capital market. It will deposit 74 percent of the fund in banks.

As per the approval, the insurer will raise a capital of Tk26 crore through offloading 2.6 crore ordinary shares at an offer price of Tk10 each under the fixed price method.

A market lot consists of 500 shares and an investor needs Tk5,000 to apply for each lot of the company's IPO shares.

AAA Finance and Investment, IIDFC Capital, and BLI Capital are working as issue managers of Express Insurance.

From the IPO fund, Express Insurance will invest Tk2 crore in treasury bonds, Tk1 crore in mutual funds and Tk2.21 crore in the secondary market of the stock exchange.

The remaining Tk19.36 crore will be kept in fixed deposit receipts in banks.

Set up in 2000, the company's authorised capital is Tk75 crore, and paid-up capital stands at Tk39.11 crore.

Md Abdul Awal, chairman of Express Insurance, is also holding the post of the managing director of Synthia Securities, a brokerage firm.

Besides, Express Insurance's Vice-Chairman Mahfuza Younus is holding the post of the chairman of Sonali Papers and Board Mills.

Sonali Paper is currently staying outside the main market of the Dhaka Stock Exchange because of its poor business performance. But it has secured permission from the securities regulator to come back to the main market of the country's prime bourse.

The revenue of Express Insurance has been stagnant for the last five years. The figure was Tk42 crore in 2014, which came down to Tk40 crore in 2018. 

For the increasing operating cost, the net profit of the company has decreased by 49 percent during the five years. Its net profit was Tk4.38 crore in the 2018 financial year.