The Securities and Exchange Commission on Monday granted the much-awaited permission to float on the country’s capital and money markets the Tk 5,000-crore Bangladesh Fund, an open-ended mutual fund sponsored by the Investment Corporation of Bangladesh and seven other state-run financial institutions.
In a meeting in the evening, the commission approved the trust deed and investment agreement of the fund comprising a Tk 1,500 crore sponsor amount and Tk 3,500 crore to be offered for public subscription at the rate of Tk 100 per unit.
The equities market regulator approved the ICB Capital Management as the trusty and custodian of the fund and the ICB Asset Management as its manager.
The ICB had applied to the SEC for granting a number of incentives for the fund, including floating half of the fund on the capital market and the other half on the money market and reducing both the registration fee and the annual charge to Tk 50,000 each.
The commission, however, turned down the requests for incentives as it found those contradictory to the securities market rules, according to which, a mutual fund would have to invest at least 75 per cent of its total amount in the capital market and the rest in any other investment instruments.
The request for fee reduction was also turned down as the SEC refused to make any exception to the rule of charging a registration fee of 0.20 per cent and an annual charge of 0.10 per cent of the total amount of any mutual fund. It means the registration fee of Bangladesh Fund will amount to Tk 10 crore and the annual charge to Tk 5 crore.
‘The fund will have to be registered with a sub-registrar’s office before it into operation,’ SEC executive director Saifur Rhaman told a news briefing after the meeting.
He said, ‘As the commission has approved the Bangladesh Fund, it surely looks for some thing positive out of it.’
The ICB as the prime sponsor will invest Tk 500 crore in the fund. The amounts to be invested by six of the co-sponsors are Tk 200 crore by Sonali Bank, Tk 200 crore by Janata Bank, Tk 200 crore by Agrani Bank, Tk 100 crore by Rupali Bank, Tk 100 crore by Bangladesh Development Bank, and Tk 100 crore by Shadharan Bima Corporation.
The seventh co-sponsor, Jiban Bima Corporation, is yet to confirm the amount it is going to invest in the fund, an ICB official told New Age on Monday.
‘We did not receive any confirmation from Jiban Bima about its investment amount. But, as per the rule, a mutual fund gets approval only if a sponsor of it ensures investment of at least 10 per cent of the total amount,’ he said.
Asked about the incentive that the ICB had sought from the finance ministry, the official said they were still working on it.
The ICB has requested the finance ministry to allow investment of undisclosed money in the fund and relax the conditions for private commercial banks to invest in the fund.
It also requested the ministry to allocate to the Bangladesh Fund 10 per cent of the shares of the state-owned enterprises scheduled for offloading in the equities market at face value.
The ICB also asked for the Bangladesh Fund a 5 per cent quota of all the initial public offerings to be floated after the fund came into operation.
In the face of the relentless plunge in share prices in the December-January period and violent street demonstrations staged by the general investors, the government on February 27 asked the ICB and four state-run banks to invest in the capital market from their own capital in order to bring stability in the volatile capital market.
ICB attached the highest priority to the directive and declared on March 6 of forming a Tk 5,000 crore open-ended mutual fund with seven state-run banks and financial institutions making large-scale investments in it.
The SEC on Monday’s meeting also approved the MTBL Mutual Fund’s trust deed and Sandhani Life Insurance as its trusty and Brac Bank its custodian. The MTBL mutual fund is a scheme-based fund which received the permission under the umbrella trust deed.
‘As the fund is a scheme-based one, there is no specific amount mentioned for the fund. It will come up with different schemes with different amounts,’ said an SEC official.
Courtesy of New Age
