Some most common and important general information about the Investment Corporation of Bangladesh (ICB) are discussed below:
Background of Investment Corporation of Bangladesh
After liberation, in view of socio-economic changes, the scope for private sector investment in the economy was kept limited. With the passage of time, the policy was liberalized and investment by the private sector in a project raised to Tk. 10 crores.
Inspire of the adequate facilities and incentive provided to the private sector encouraging response was not forthcoming.
One of the reasons, among others, was the lack of institutional facilities to meet the equity gap by raising loan term funds from the capital market. Thus, the need for reactivation to the capital market/stock market was keenly felt.
With a view to encouraging and broadening the base of investment, developing the capital market, mobilizing savings, and providing for matters ancillary thereto, Investment Corporation of Bangladesh (ICB) was established on 1st October 1976 under the Investment Corporation of Bangladesh Ordinance (No XL of 1976).
The establishment of ICB was a major step in a series of measures undertaken by the government to accelerate the pace of industrialization and develop a well-organized and vibrant capital market in Bangladesh.
It caters to the need of institutional support to meet the equity gap of the industrial enterprises having Public Limited Company status.
In view of the national policy of increasing the rate of marginal savings and investment to foster a self-reliant economy, ICB assumes an indispensable and far-reaching role.
ICB provides underwriting of public issue of shares with or without providing bridging loans and debenture loan in the priority sector of industrial enterprises/organizations/institutions which are economically viable, technically feasible, socially desirable.
In order to strengthen considerably, it investment banking functions, the development financing role of ICB has been diversified recently.
In order to enable a company to complete its projects, money is advanced against underwriting of shares as a bridging loan. Subsequently, when the project commences commercial production the bridging loan is adjusted out of the proceeds from the sale of stock/shares.
Most of the underwriting assistance is expected to be for new projects which would not be in positions attract investors for the purchase of its issue of shares at eh initial stage.
The corporation carries out the above underwriting and debenture purchase functions by organizing underwriting consortium of commercial banks, insurance corporations, and financial institutions including merchant banks, and thereby spread to the risk of undertaking.
The corporation does not generally seek any controlling interest in any of the enterprises financed by it except when that becomes necessary and expedient in the interest of the corporation and other shareholders.
The present key activates of ICB are as follows:
ICB Unit Fund Management
It is an open-ended Mutual Fund through which the small and medium servers get the opportunity to invest their savings in a balanced relatively low-risk portfolio. ICB launched this scheme in April 1981.
One can buy a maximum of 10,000 units in his/her own or joint names. Units are not sold to institutions. ICB has so far declared attractive dividends on units every year.
ICB Mutual Fund Management
Mutual Funds are also known as close-ended Mutual Funds. One can invest in such Funds at the time of initial public offering (IPO) and subsequently through the stock exchanges either in which these Funds are listed. ICB has so far floated eight close-ended Mutual Funds.
Term Deposit Scheme
This is a newly introduced scheme to mobilize savings for profitable investment in securities. ICB offers attractive interest rates in this scheme.
A depositor can borrow up to 80% against his/her deposit under prescribed terms and conditions. Both individuals and institutions can participate in this scheme.
Investors’ Account Scheme
The Investors’ Account Scheme was introduced in June 1977. Over the years, this scheme has grown tremendously in-depth and span because of its popularity with small ad medium size investors. More than severity thousand accounts have been opened under this scheme.
In order to raise long term debt and equity form the primary market, the government bodies, enterprises, or companies may seek intermediary assistance from ICB in the form of underwriting.
Because of its light and proven experience, reputation, asset backup, and an established network of regional offices, ICB is in an excellent position to attract potential investors to the proposed issue of shares, debentures, and to the securities for successful floatation of IPO and placements.
ICB may also provide advance against the proposed public issue in the form of bridge Loan to assist the implementation of the project as per the guidelines of the Board of Directors of ICB. Commission, fees, interest, etc. Underwriting/Bridge Loans are very competitive and negotiable.
Loan against Unit Certificates
This is ICB’s another newly introduced scheme, especially designed for the ICB unitholders to meet their emergency fund requirement for investment in securities.
ICB provides lease finance of industrial machinery/equipment. ICB is in a position to provide a professional device and financial assistance to the intending clients.
ICB acts as an agent of the issuers and investors for private placements of securities. Under this arrangement, ICB places securities to individuals/institutions on behalf of the assurer for which it charges fees. ICB also acquires shares/securities for its own portfolios through placement.
- Participates in Government disinvestment program
- Participates in joint venture collaboration projects,
- Provides investment counsel to the prospective investors in industries, stocks, and shares, etc., and Endeavour to guide the potential investors to promote and organize industrial enterprise as public limited companies. It also provides counsel for balancing, modernization, replacement, and expansion (BMRE) of the existing enterprises and their re-organization/conversion into public limited ones.
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