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Welcome to The Presentation

IPO process analysis and performance evolution

Prepared for

Dr. M Farid Ahmed Professor Department of Finance University of Dhaka

We are..
Sl no. 1
2

Name
Abhijit Kumar Saha Fahmina Tasmin Munia

ID
15-114(BBA) (MBA) 15-144(BBA) 657(MBA)

Presented by..

Fahmina Tasmin Munia ID:15144(BBA) 657(MBA)

What is IPO?
Public Offering (PO) means collecting funds for capital from the public. Mainly, there are two types of public offering:

Seasoned public offering Initial public offering (IPO).


Types of IPO Fixed pricing method Book building system

ADVANTAGES OF IPO
Companies
loan

facilities avoiding fears of easy take-over reduces the reliance on debt financing gains national and international importance

Investors benefited from the enhancement of the company's operational efficiency. no secrecy of the price realization Sock Exchange protect the interest of the investors

DECISION OF IPO
Issuer (Submission of Prospectus)

Consent for IPO/rejected


Q u e ri e s

Securities &Exchange Commission

Department of Listing Affairs

Recommendation Expert Panel Recommendation for Listing

C o n s e nt

DSE Board

IPO performance evaluation


IPO subscription throughout years 2007-2012 are shown below
25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 Series1
IPO Subscription

COMPANIES come into market through IPO in 2012


Sl.No. Issuer 1 2 3 4 5 6 Envoy Textiles Limited Paid up Capital Tk. (Pre-IPO) 1,000,000,000 Post-IPO Paid up capital (TK.) 1,900,000,000 1,171,650,000 721,473,120 4,250,000,000 1,827,500,000 1,960,091,700 IPO/Issue Size Tk. (@FV) 300,000,000 300,000,000 215,720,000 260,000,000 475,000,000 310,000,000 IPO Premium (TK.) 600,000,000 0 302,008,000 1,690,000,000 475,000,000 775,000,000 Total IPO Size (TK.) 900,000,000 300,000,000 517,728,000 1,950,000,000 950,000,000 1,085,000,000 Generation Next Fashions Limited 871,650,000 Aamra Technologies Limited Unique Hotel & Resorts Limited Saiham Cotton Mills Limited Bangladesh Submarine Company Limited GBB Power Limited NCCBL Mutual Fund-1 GPH Ispat Limited Padma Islami Life Limited GSP Finance (Bangladesh) Limited 203,745,120 2,300,000,000 877,500,000 Cable 875,091,700

7 8 9 10 11

304,999,900 150,000,000 700,000,000 Insurance 180,000,000 Company 276,460,800

1,124,999,900 650,000,000 1,300,000,000 300,000,000 776,460,800

205,000,000 500,000,000 200,000,000 120,000,000 200,000,000

615,000,000 0 400,000,000 0 300,000,000

820,000,000 500,000,000 600,000,000 120,000,000 500,000,000

12 13 14

First Bangladesh Fixed Income 2,000,000,000 Fund NLI First Mutual Fund AB Bank First Mutual Fund 100,000,000 300,000,000

4,500,000,000 357,580,000 300,000,000

2,500,000,000 257,580,000

0 0 0

2,500,000,000 257,580,000 0

COMPARISON OF MARKET RETURN &SECURITIES RETURN


AB BANK 1ST MF 1ST BD GSP NLI 1ST FIXED Finance MF I.F. Co. GPH Ispat PADMA NCCBL Islami MF L.I.L. GBB Saiham POWER Cotton BD Submari ne Aamra Tech Unique Envoy Genera Hotel & Textiles tion Resorts Limited Next Fashion s Limited

MEAN 0.009 0.006 0.011 -0.033 0.055 0.075 0.024 0.007 0.082 S.DEV. 0.079 0.099 0.059 0.064 0.111 0.168 0.037 0.203 0.276

0.161 0.277

0.180 0.508

0.140 0.344 0.524 0.286 0.000 0.000

Average Market Return=.34%

Market Return vs Securities return


0.6 0.5 0.4 0.3 0.2 0.1 0 -0.1 -0.2 Series1 Series2 Linear (Series2)

Presented by..

Abhijit Kumar Saha ID:15-114(BBA) (MBA)

Comparison Between Market Variance &Securities Variance


AB BANK 1ST MF NLI 1ST MF 1ST BD GSP FIXED Finance I.F. Co. GPH Ispat PADMA Islami L.I.L. NCCBL MF1 GBB POWER Saihal Cotton BD Submarin e Aamra Tech Unique Hotel & Resorts Generati on Next Fashions Limited Envoy Textiles Ltd. DGEN S.DEV. 7.91% 9.89% 5.94% 6.39% 11.10% 16.83% 3.67% 20.33% 27.59% 27.75% 50.83% 28.60% 0.00% 0.00% 6.72%

Market Var. vs Securities Var.


60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% S.DEV. Linear (S.DEV.)

Correlation Between DGEN and IPO Floated Securities


DGEN AB BANK 1ST MF NLI 1ST MF 1ST BD GSP GPH FIXED Finance Ispat I.F. Co. PADMA Islami L.I.L. NCCBL MF1 GBB POWER Saihal Cotton BD Submarine Aamra Tech Unique Hotel & Resorts

DGEN

1.00

0.19

0.36

0.37

0.41

0.46

0.42

0.49

0.56

0.54

0.60

-0.09

0.52

Correlation between DGEN & IPO floated securities


1.20 1.00 0.80 0.60 0.40 0.20 0.00 -0.20

PROBLEMS REGARDING IPO PROCESS


1. 2. 3. 4. 5.

THE COST ASPECT: THE TIME ASPECT DISCLOSURE OF INFORMATION LOOSING FLEXIBILITY CURRENT IPO PROCESS

Recommendation & Conclusions


1.
2.

3. 4.

5.

Benefits of IPO should be highlighted so that more firms become willing for listing in the stock market. The whole procedure of IPO process should be arranged quickly enough by which new companies could be inspired to raise necessary fund in a timely manner. The rules of Direct Listing regarding the disposal of shares need modification. Information documents should be analyzed carefully to find out any discrepancy in the information provided and thereby prohibit the fundamentally weak company into listed in the stock exchange. To make the market more efficient, weak companies should be de-listed by the listing authority.