- BDBL plans to sell more than one crore ICB shares in phases
- Currently, BDBL's total ICB holding is 206,538,492 shares
- ICB shares closed 2.8% lower at Tk119.9 at the DSE on Sunday
After selling one lakh shares of the Investment Corporation of Bangladesh (ICB) in January, its corporate director the Bangladesh Development Bank Ltd (BDBL) last week announced offloading of another 10 lakh ICB shares on the public market.
Sources at both the state-owned entities said BDBL is pursuing its approved plan to sell more than one crore ICB shares out of its total holding of 206,538,492 in phases.
The development bank is reducing its stake in the Investment Corporation in a move to comply with the ICB Act 2014 which does not allow it to hold more than 24% of ICB shares.
BDBL, which emerged in 2010 through the amalgamation of two state-run development financiers the then Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha, was holding 24% of ICB shares until fiscal 2014-15.
In that fiscal year, ICB issued 1 right share against every two of its existing shares in a bid to increase its paid-up capital.
But, some investors did not subscribe to the ICB right shares in the then bearish phase of the stock market.
And that changed the shareholding ratio within ICB. BDBL's stake in ICB surpassed its legal ceiling of 24% and over the years stock dividends to all shareholders only widened the stake gap as stock dividends were essentially being issued against existing shares held by each investor.
At the end of last June, BDBL was holding 20,65,38,492 ICB shares, amounting to 25.63% of the total ICB shares.
The government and the market regulator then approved BDBL to gradually sell more than one crore ICB shares to bring down its stake to 24%.
A senior BDBL official told The Business Standard that the bank would enjoy flexibility in terms of the time it might need to offload the gigantic stake worth around Tk120 crore at the current market value of the ICB.
The divestment is also partially helping ICB to comply with a September 2021 order by the market regulator to ensure 10% free-float shares.
Free-float shares are company shares that can be traded without any prior announcement.
Securities law compels listed company sponsors and directors to make public announcements before buying and selling their company shares. Also, other investors holding 10% or more stake in a listed firm have to make the same prior disclosure of their buying or selling intention.
In ICB, the finance ministry is the largest shareholder, having a 27% stake.
Various state-owned companies such as BDBL, Sonali Bank, Agrani Bank, Janata Bank and Sadharan Bima Corporation, which either were sponsor-shareholders or corporate directors, collectively own 69.8% stake.
Institutional investors and the general public own 1.78% and 1.42% stakes respectively and their total 3.2% holdings are the only free-float portion of ICB shares.
ICB is the largest capital market entity in the country in terms of its size. Portfolio management, asset management, brokerage services, investment banking services and most importantly the de-facto market-making are its role in the capital market.
ICB has also been engaged in the lending business.
A protected market for its capital market services over decades, the significant edge due to its privileged access to price-sensitive information and its sheer size in capital market operations made the ICB stand out unlike any other entity in the country.
But its historic poor recovery in the lending business and an extreme lack of sticking to selective stocks in investing made ICB unpopular to a large number of analysts in the modern market.
ICB shares closed 2.8% lower at Tk119.9 on the Dhaka Stock Exchange on Sunday.