The Bangladesh Securities and Exchange Commission (BSEC), in a meeting Wednesday, has allowed Midland Bank Ltd to raise Tk70 crore from the capital market with an initial public offering (IPO).
The bank will issue 7 crore shares at a face value of Tk10 each.
Of the IPO fund, the bank will invest over Tk61 crore in Treasury bonds and bills, Tk5 crore in the listed 'A' category securities, and use the remaining Tk3.89 crore to meet the IPO expenses.
LankaBangla Investments Limited will be the issue manager of the bank's IPO.
The sponsor-directors of Midland Bank must jointly hold at least 30% shares in the company, while each director must individually hold at least 2% before the bank's stock market listing.
Also, it will appoint independent directors as per the corporate governance guidelines of the BSEC.
Midland Bank, incorporated in 2013, has emerged as a full-fledged commercial bank with a well-diversified portfolio, a strong financial base with shock absorption capability, and operational efficiency.
The size of the planned IPO is significantly smaller compared to its peer new generation banks which are collecting up to more than five times the money from the capital market.
Earlier, the bank's Managing Director and Chief Executive Officer, Md Ahsan-uz Zaman, said "We have been operating with more than adequate capital and the sought amount is mainly to fulfill regulatory requirements only."
"The more equity you collect from shareholders, the more dividends you need to pay, and that pushes banks to take more risks," he said, adding that when in need, the bank might go for more equity in the future.
Midland Bank's paid-up capital is nearly Tk570 crore, which is set to elevate to nearly Tk640 crore after the IPO.
According to the Credit Rating Agency of Bangladesh, Midland Bank's long-term credit rating is A1, which is ST-2 for the short term. The credit rating reflects the creditworthiness of entities.
The bank now operates with 35 branches, 16 sub-branches, and 100 agent banking centers, and its non-urban outlets outnumber the ones in cities.
According to the bank's financial statements for 2021, its net asset value per share stood at Tk13 without revaluation and earnings per share (EPS) at Tk0.90.
Its five-year weighted average EPS was Tk1.07.