PM Advisor Salman F Rahman questions Walton Hi-Tech IPO

Salman F Rahman has questioned the approval of the listing of Walton Hi-Tech Industries Limited on the stock market by offloading “only” 1 percent of its shares.

The prime minister’s adviser for private industry and investment raised the question at a virtual news conference organised by Bangladesh Securities and Exchange Commission on Sunday.

“The sponsors hold the remaining 99 percent shares. It has made Walton the company with the second-largest market capital all of a sudden,” he pointed out.

“I don’t know whether it has been done intentionally, but it is sending a wrong message,” he added.

The technology company Walton has raised Tk 1 billion from the market by releasing 2,928,343 shares in the book-building system through the IPO after receiving the BSEC nod in early 2020.

Walton issued 1,379,367 of these shares to eligible investors at their own bidding prices.

The cut-off price per share was fixed at Tk 315 through bidding in March.

General investors got 1,548,976 shares at Tk 252 per issue or in 20 percent discount from the cut-off price.

Walton has hit the ceiling every day since the trading began on Sept 23.

On Sunday, Walton shares were being traded at Tk 874.8 per issue.

According to the Dhaka Stock Exchange, Walton has offloaded less than 1 percent of its shares.

Many believe Walton share price is rising continuously because a small number of shares were released against a high demand.

“Many companies decided not to get listed because they knew that 50 percent shares need to be released among the general investors. Many good companies would have come to the market had they known that only 1 percent share is enough,” Salman said.

BSEC Chairman Shibli Rubayat-Ul-Islam said Walton’s bidding and other parts of the IPO process ended before he took charge. 

“What we could do is to ensure that the general investors get a 20 percent discount,” he said.

“We would have taken a closer look at the issue if we had more time. But we are keeping an eye so that such things do not happen in future. We are seeing to it that it doesn’t harm the market,” he said.

The BSEC chief said they have finalised the process to give approval to IPO applications filed two to three years ago.

The commission will begin working on the first IPO application it received after approving one or two more, Shibli said. 

It is applying its judgement as much as possible to approve the old IPO applications, the commission chairman said.

“But the people in the commission are human after all. They can make small mistakes but these are not deliberate. And we always work conscientiously,” he added.  

Walton has a total of 302,928,343 shares in the market. The directors own 99.3 percent shares, institutional investors 0.46 percent and general investors 0.51 percent.

Mohammad Emran Hasan, the CEO of Shanta Asset Management Ltd, told bdnews24.com that the companies in Bangladesh can raise capital from the share market through book-building and fixed-price methods.

In the fixed-price method, the BSEC fixes the price and number of shares.

In the book-building method, the company sets the amount of money it wants to raise from the market and the institutional investors fix the price. The number of shares to be offloaded is also fixed at that time.    

With over Tk 3 billion paid-up capital and Tk 69.98 billion reserve, Walton posted more than Tk 13.76 billion in profits in 2018-19 fiscal year.

After the IPO, Walton’s market capital stands at Tk 246.52 billion, the second highest after Grameenphone’s Tk 446.95 billion.