GP shares debut with 'rational price'
Tuesday, 17 November 2009

Grameenphone shares debuted on the country's twin bourses on Monday after a long wait but the prices were not as high as some shareholders had expected them.

Prices of the biggest-ever IPO in Bangladesh's history opened at Tk 160 on the Dhaka Stock Exchange, surged to Tk 195 at one point before ending on Tk 177.30.

Prices of GP shares opened a bit higher on the Chittagong Stock Exchange at Tk 200 but didn't move up any further. It went as low as Tk 162.50 but closed a bit higher at Tk 176.50 with the turnover amounting to Tk 236.861 million.

Meanwhile, the floating caused the prime bourse's key index to cross the 4000 mark to touch a new high.

The DGEN or general index skyrocketed at the opening bell, pushing 720 points up. It closed at 4148.11 points at the end of the day's session, surging 764.87 points or 22.60 percent.

Bourse authorities said the major reason behind the huge hike was GP as it debuted in the market with a huge amount of shares.

A total of 312,501 lots of shares were handed to investors during the IPO with each lot containing 200 shares.

"Out of the day's 764 points, GP accounted for 717 points alone," DSE chief executive Satipati Maitro told the media.

He said the hike was "very much usual" considering the 'circumstances'.

The floating added Tk 23,940 crore to the market capitalisation, added the prime bourse's CEO.

But shareholders were far from impressed.

Khalilur Rahman, who got 600 shares through the IPO, was in the mood to sell some of his holdings on the first day to make quick bucks, but he though better of it.

"I was hoping it would reach at least Tk 300," he told

The same happened with many others.

Sharifa Sultana, who works with a private bank, said she was not thinking of selling her 200 shares, for now.

"Everyone was saying that prices would shoot up at least to Tk 400, but it barely reached Tk 200," she told over phone.

Despite the 'let-down', GP shares worth Tk 1.32 billion changed hands on the DSE, making it the day's turnover leader.

Experts, though, say the market behaved in a matured manner.

"For the first time investors acted sensibly, shareholders did not rush to sell and buyers did not see Tk 200 as a rational price for a GP share," said mutual fund operator Yaweer Sayeed.

"Investment in the true sense happened, this market witnessed trading, not high-stake gambling," he said.

Usually, IPOs are attractive in that they can trade 30 to 40 times the face value on debut.

Sayeed says he finds the price more or less justified given the size of the floating.

"There is no shortage of GP shares, so it may have bashed shareholders' expectations but it [the price] was anticipated," added the top official of asset management firm AIMS of Bangladesh.

Economist Abu Ahmed echoed Sayeed. He said that it was a good sign that the IPO did not follow the usual trend of prices "skyrocketing".

"Quite a number of shareholders are not thinking of just selling it off on the first day as they viewed it as an investment, not a tool to trade," he said.

The huge number of shares in the market also contributed to the price building, added Ahmed, an adviser for market regulator, the Security and Exchange Commission.

Hype for the country's largest mobile-phone operator's floating was at the peak among investors as it attracted subscriptions worth Tk 17.25 billion from over one million prospective investors.

The offer price valued the company at only 3.3 times its 2008 earnings before interest, tax, depreciation and amortisation (EBITDA), which created a buzz among investors.

Norway's telecom giant Telenor owns 62 percent of Grameenphone, launched in 1997, while the local Grameen Telecom owns the rest.


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