IPO (Initial Public Offering) is a public offering of shares by a company to institutional and general investors for listing in the stock market. Otherwise known as ‘primary market’.
IPO shares are allocated among 4 types of applicants on a proportionate basis.
These are –
1. Eligible Investors (EI)
2. Employees and Others
3. GP (General Public)
4. NRB (Non-Residential Bangladesh)
Generally 25% of the total IPO shares are allotted to Eligible Investors, 5% to expatriate applicants and 70% to general applicants.
However, most of the time 21.25% of the total IPO shares are allocated for Eligible Investors, and 15% for Employees and Others while the remaining 63.75% shares are allocated for general applicants and expatriate applicants.
Where 6.67% of the shares allotted to general applicants and expatriate applicants are shared equally among all expatriate applicants (per 10 thousand taka) and the remaining 93.33% among all general applicants (per 10 thousand taka).
For example, ABC a company issues 1,00,000 shares at Rs 10 to raise capital through IPO. Hence, 25% or 25,000 shares of the total shares are allotted to Eligible Investors, 5% or 5,000 shares to expatriate applicants and 70% or 70,000 shares to general applicants.
Suppose, here a total of 5,500 ordinary investors and 300 expatriate investors apply for shares worth 10,000 taka at the rate of 10 taka. So here every expatriate applicant will get (5000÷300 = 16.6) 16 or 17 shares each.
Similarly common applicant will get (70,000÷5500 = 12.7) 12 or 13 shares each.
Shares are always shown in whole numbers. As a result, 1 share is less or more by converting the decimal number to a whole number.
Investing in IPO is a profitable venture. IPO is considered as a safe investment area in the stock market of Bangladesh.
These are –
1. Eligible Investors (EI)
2. Employees and Others
3. GP (General Public)
4. NRB (Non-Residential Bangladesh)
Generally 25% of the total IPO shares are allotted to Eligible Investors, 5% to expatriate applicants and 70% to general applicants.
However, most of the time 21.25% of the total IPO shares are allocated for Eligible Investors, and 15% for Employees and Others while the remaining 63.75% shares are allocated for general applicants and expatriate applicants.
Where 6.67% of the shares allotted to general applicants and expatriate applicants are shared equally among all expatriate applicants (per 10 thousand taka) and the remaining 93.33% among all general applicants (per 10 thousand taka).
For example, ABC a company issues 1,00,000 shares at Rs 10 to raise capital through IPO. Hence, 25% or 25,000 shares of the total shares are allotted to Eligible Investors, 5% or 5,000 shares to expatriate applicants and 70% or 70,000 shares to general applicants.
Suppose, here a total of 5,500 ordinary investors and 300 expatriate investors apply for shares worth 10,000 taka at the rate of 10 taka. So here every expatriate applicant will get (5000÷300 = 16.6) 16 or 17 shares each.
Similarly common applicant will get (70,000÷5500 = 12.7) 12 or 13 shares each.
Shares are always shown in whole numbers. As a result, 1 share is less or more by converting the decimal number to a whole number.
Investing in IPO is a profitable venture. IPO is considered as a safe investment area in the stock market of Bangladesh.
Note: Among these 4 types of applicants, who will get the amount or percentage of shares, is mentioned in the percentage or number in column 2 (Size of the present issue, with break-up) of the CAPITAL STRUCTURE column of (Prospectus of Forthcoming IPO).
