INVESTMENT CORPORATION OF BANGLADESH

Background: The Investment Corporation of Bangladesh was established on October 01,1976 nder the Investment Corporation of Bangladesh Ordinance, 1976 !"o#$% of 1976&# Obj c!"# $: 's enco raged in the ICB Ordinance, 1976, ICB was established to f lfill the following ob(ectives) To enco rage and broaden the base of investment To develop the capital mar*et To mobili+e the savings To provide for matters ancillar, thereto# Func!"on$: In order to achieve its ob(ectives the ICB carries o t the following f nctions) -nderwriting .lacement Investor/s 0cheme 1 nd 2anagement . blic Iss e 2anager to the . blic Iss e Tr stee Trading in 0toc* 34change Other 'ctivities ! term de5posits, provide loan against nit certificates, lease finance& IMPACT OF ICB%S ACTIVITIES ON CAPITAL MAR&ET: The activities of ICB are pivotal to the development of capital mar*et in Bangladesh that is also cr cial for the accelerating pace of ind strial development# The nderwriting6bridge finance operation of ICB enables implementation of ind strial pro(ects b, ens ring the m ch needed e7 it, finance# INVESTMENT BAN&ING: In# $!' n! bank"ng is a special variet, of financial intermediation to meet financing needs of l mp, and long investments, and it is now going thro gh an ever changing pattern ad( stment and innovation#

In# $!' n! Bank r: ' financial organi+ation that speciali+es in selling primar, offering of sec rities# The, also perform other financial f nctions, s ch as advising clients, negotiating mergers and ta*eovers, and selling secondar, offerings# Func!"on$ o( In# $!' n! Bank$: 'n investment ban* generall, performs the following f nctions li*e) 1#Ad#"$or) (unc!"on$ 8# *nd r+r"!"ng (unc!"on) 'cts as intermediar, for new iss es9 o tright p rchase of entire iss e b, and Investment Ban* ! or a s,ndicate& that ta*es the ris* of reselling the iss es to the p blic9 nderwriter tries to resell the iss e at a higher prices and earning the difference as an nderwriting fee or spread# S)nd"ca! $: :ro p of persons or instit tions that share (ointl, the responsibilit, of selling sec rities and nderta*e to bear the ris*s, if an,# Func!"on$: To determine management fees To determine nderwriting fee To choose meas res to stabili+e the price of stoc* To determine selling concession To ens re competitive bid s,ndicate# Four D"$!"nc! (unc!"on$ o( a S)nd"ca! : ,a- Or"g"na!"on: determination the *inds, amo nts, and terms of the sec rities to be nderwritten ,b- Purc.a$ : The act al p rchase of sec rities from iss er or originating ho se for distrib tion and resale ,c- Bank"ng: ,d- Sa/ $ and d"$!r"bu!"on) the placement of sec rities with dealers or ltimate investors either on a straight commission or on a contract basis# T)0 $ o( und r+r"!"ng !a&1irm commitment !b&Best effort !c&'ll or none ;# P/ac ' n! (unc!"on 12 Brok r3d a/ r (unc!"on 42 Por!(o/"o 'anag ' n!

52 V n!ur ca0"!a/ 62 L a$"ng M rc.an! Bank,MB-: 2B means an, person who is engaged in the b siness of iss e management9 either b, ma*ing arrangements regarding selling, b ,ing, nderwriting or s bscribing of sec rities as an nderwriter# <endering corporate advisor, service in relation to iss e management# Func!"on$: Offer a pac*age of financial services and finance and most of their activities are non=f nd based# .a,ment b, wa, of acceptance of pa,ment obligations of b ,ers# >irect financing of ris*, b siness# In ret rn the, charge ver, high rate of ret rn# S r#"c $ O(( r d b) MB: The f nd based activities of 2Bs incl de nderwriting of e7 it,6preference share, bonds and debent res, mone, mar*et instr ments li*e C.s, C>s, TBs e7 ipment leasing, vent re capital activities etc# One of the basic re7 irements of the 2Bs is highl, speciali+ed staffs with talents# 2Bs are s all, international in character#

The . blic Offering process)

The p blic offering process is comple4# ?e generall, describe the p blic offering in the conte4t of I.O# The I.O involves three steps li*e)

728 Or"g"na!"on:
H r the *inds, amo nts, and terms of the sec rities to be nderwritten are negotiated# Once the sec rities are accepted b, the 03C, it is placed b, the iss er for competitive bid# The best bid wo ld be awarded the nderwriting# Corporations s all, go the investment ban*er for obtaining capital If a privatel, owned firm decides to go p blic @ iss ing sec rities thro gh investment ban* is a good option# To alter the capital str ct re# %everaging down !<ed cing the firm/s debt6e7 it, ratio#&

928 T. Du D"/"g nc In# $!"ga!"on:

The firm offering sec rities to the p blic ma*e a reasonable effort to disclose all material information to all potential investors# .rimar, responsibilit, for the d e diligence investigation falls on investment ban* that will s bse7 entl, manage the nderwriting s,ndicate#

:28 SEC F"/"ng Proc $$:

The 03C filling involves two parts <ed Airing Bario s e4hibits s ch as legal doc ments and a draft of the nderwriting agreement# ?hile the registration process is progressing 'n nderwriting s,ndicate is formed b, the lead nderwriter 'rrangement are made to prepare the preliminar, prospect s Certificates ! bonds6stoc*s& are printed Carr,ing the Road Show 1irm Commitment Best 3ffort

12 T. *nd r+r"!"ng:

 'll or "one

42 D"$!r"bu!"on S)nd"ca! : 52 D"$!r"bu!"on o( S cur"!" $: 62 D"#"$"on o( R # nu $:

It is the difference between the offering price to the p blic and the proceeds to the iss er# It is called the nderwriting spread6 :ross spread# :ross 0pread had three parts li*e) !a& 2anagement fee !b& The nderwriting fee !c& 0elling commission