BDT 12.47b stuck up in private placement shares

Dhaka, Nov 15 (—More than BDT 12.47 billion of investors’ money has got stuck-up in placement shares and those who paid money two years back for such shares to make some profit are facing the music, reports The Financial Express in Bangladesh.

Many of them are yet to get their shares or are counting an initial loss, as prices of some companies’ IPO (initial public offering) shares, as fixed by the regulator, are much lower than the prices they had paid to buy placement shares.

Some purchasers of placement shares said the companies, which earlier made ‘alluring’ sale of placement shares, are now reluctant to give their money back. However, some companies are returning the money of some influential investors only.

On the other hand, many investors who paid money for placement shares even in 2010 or 2011 have not yet got shares, as they paid money through third parties.

In this situation, many affected investors are sending letters to the Bangladesh Securities and Exchange Commission (SEC) on a regular basis seeking possible measures to get their money back.

SEC spokesperson and executive director Mohammad Saifur Rahman said that the regulator has no legal provision, under which it can compel a company to return the investors’ money paid for placement shares, as the investors themselves purchased those shares.

“The SEC gave consent to the companies for raising capital. It was not mentioned in the consent letters to whom and how the placement shares would be sold,” Rahman told the FE.

He said the regulator also feels the pangs of the affected investors. “There is no alternative to the investors’ awareness. So, they should look before they leap to avoid such untoward incidents in future,” he added.

Following the investors’ pressure some officials concerned of the companies are trying to make the securities regulator responsible for the predicament, as it earlier allowed the companies to issue placement shares at high prices.

As per the report of the Khandker Ibrahim Khaled-led probe committee, GMG Airlines sold placement shares worth BDT 3.0 billion, Orion Pharma BDT 5.25 billion, ST Holdings BDT 1.3 billion, LankaBangla Securities BDT 1.25 billion and Energy Prema BDT 1.55 billion.

Meanwhile, an investor who purchased 220,000 placement shares of GMG Airlines at a price of BDT 50 each said the purchasers of such shares failed several times to talk to the company officials about the money they paid for placement shares.

“We cannot meet the GMG officials, as they are avoiding us. The officials who sit at its Nikunja office told us to contact the company’s share department. On the other hand, the share department officials are also unable to give us any suitable reply.”

He said the shareholders cannot meet the company authority anywhere other than in the AGM.

“In the company’s last AGM, Mr. Salman F Rahman told the investors that his company did not sell placement shares at their doorsteps,” he added.

Beximco Group Secretary Mr. Md Asad Ullah refused to make any comment, saying that he is not the authorised person to speak about the issue.

However, the company sources ruled out the investors’ allegation saying that the managing director of GMG Airlines is available in its office.

“The company failed to go for expansion, as the government postponed the book-building method for offloading shares. However, we are trying to resume operations,” he added.

LankaBangla Securities raised BDT 1.25 billion by issuing placement shares at an offer price of BDT 225 each.

The authority said the company is not in a position to pay back the investors’ money, taken earlier for placement shares, as the there is no buyback policy.

“There was no lack of effort from us to go public. We are hopeful of going public after completion of demutualisation,” said Mr. Wali Ul Islam, chief executive officer (CEO) of LankaBangla Securities.

When asked, whether the company is only giving back the money of influential purchasers, Mr. Islam said it happened in some cases, as other shareholders have received their placement shares.

“A person can be considered influential because of his understanding or acquaintance with the company high-ups. However, other interested persons can communicate with our company to get their money back,” Mr. Islam added.

An investor has recently sent a letter to the SEC stating that he purchased placement shares of Bengal Windsor Thermoplastic worth BDT 4.0 million at an offer price BDT 40 each.

“My net loss stands at BDT 1.5 million, as the SEC has approved the company’s IPO at an offer price of BDT 25, including a premium of BDT 15 for each share.”

He also said the company officials refused to compensate his loss.

“I have all documents and an audio record where a company official named Mr. Rajib Chakrabarty told me that they would not return the extra premium,” the affected investor added.

When asked, company secretary of Bengal Windsor Thermoplastic Mr. Rajib Chakrabarti said that they were discussing the ways to solve the problem.

“I can’t remember what I’ve told someone. However, we are talking with the authorities about the issue. Definitely, a solution can be reached regarding the problem,” he told the FE.

The SEC recently approved the IPO proposal of Orion Pharma with an offer price of BDT 60 per share, although the company sold placement shares at a price of BDT 100 each.

Two Chittagong-based purchasers of the company’s placement shares told that they were yet to get their shares even after two and a half years of paying money.

“The Chittagong branch of ICB Capital Management took money from us for giving placement shares of Orion Pharma. But so far we haven’t got the shares for which we paid money, and the ICB is not giving us any concrete answer about it,” one of the investors said.

He also said many investors like him have not yet got the placement shares of Orion Pharma.

On the other hand, sources at the Dhaka Medical College and Hospital (DMCH) said a large number of doctors of the hospital and Bangabandhu Sheikh Mujib Medical University (BSMMU) were motivated by the representatives of Orion Pharma to purchase its placement shares.

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