The Securities and Exchange Commission (SEC) may allow the institutional investors to obtain a certain portion of shares of mutual funds under pre-IPO placement.
According to market operators, the institutional investors will be encouraged to invest in the initial public offerings (IPOs) of mutual funds, one of the risk-free securities in stock trading, once SEC gives the final consent.
"We are in favour of making certain provision for allotment of the IPOs of mutual funds to the institutional investors and our policy-making body will hopefully take the final decision as soon as possible in favour of the system which existed until mid-2004," one SEC source told the FE.
State-owned Investment Corporation of Bangladesh (ICB), the largest institutional investor in the country's stock market, has already made a plea to the stock market regulatory body to avail of the facility being enjoyed by institutional investors all over the world.
"We had applied for granting institutional investors a minimum of 10 per cent of the total shares of mutual funds," one ICB source told this correspondent.
ICB sources said floatation of two more mutual funds worth Tk 200 million will be delayed if the SEC fails to allow the facility for the institutional investors soon.
The proposed ICB mutual funds are Mutual Fund for non-resident Bangladeshis (NRBs) and Second AMCL Islamic Mutual Fund.
The calendar year 2005 saw a major rise in the overseas workers' remittances that stood $4,241.55 million, marking a robust 18.77% growth over $3,571.15 million of 2004.
"The remittances sent by the NRBs are mostly invested in real estates, land and other areas but there remains a very good scope of their investments in the country's stock market," one ICB source said adding the proposed mutual fund is thus targeted for the NRBs.
ICB currently operates ten mutual funds worth Tk 375 million out of 13 listed ones while the rest two are operated by AIMS of Bangladesh and one by Bangladesh Shilpa Rin Sangstha.
All the listed mutual funds are being traded in A-category and their dividend yields are also attractive to investors.
The net profits of ICB AMCL First Mutual Fund and ICB AMCL Unit Fund rose to Tk 19.75 million and Tk 34.63 million respectively in the year ended June, 2005 against Tk 14.96 million and Tk 23.98 million of the previous fiscal.
The net profits of ICB AMCL Islamic Mutual Fund and ICB AMCL Pension Holders Unit Fund were Tk 5.6 million and Tk 3.8 million respectively till June 30,2005.
Four mutual funds operated by ICB Asset Management Company Ltd (ICB AMCL) declared higher rate of dividends for the shareholders for the year ended June 30, 2005.
ICB AMCL is a subsidiary of the ICB.
ICB AMCL First Mutual Fund declared 16 per cent dividend against 12 per cent of the previous fiscal year.
ICB AMCL Islamic Mutual Fund, which got listed on the stock exchanges in early-2005, announced five per cent dividend while ICB AMCL Pension Holders Unit Fund declared dividend at the rate of Tk 9.0.
The Pension Holders Fund has also been traded since late 2004.