Dhaka Stock Exchange will not propose any dividend for its shareholders for the first financial year after demutualisation, in a move to improve its financial strength and make the bourse’s shares more attractive for prospective strategic and institutional investors.
The proposal will be placed at the premier bourse’s 53rd annual general meeting for fiscal 2013-14 on February 11. The bourse was demutualised in November 2013 to bring more transparency and accountability into the capital market.
“The board made the decision after a verbal consensus of the bourse shareholders who informally agreed not to take any dividend right now,” said a member of the DSE board. The bourse’s accounts will be able to support a maximum of 7 percent in cash dividends for fiscal 2013-14, but it will result in an asset outflow that will have a negative impact on its net asset value (NAV). The DSE’s net income was Tk 133.95 crore with earnings-per share (EPS) of Tk 0.74, against Tk 115.51 crore and Tk 0.64 a year ago. Most of the income is generated from interest on fixed deposits, rather than the bourse’s core business.
The NAV per share stood at Tk 10.93 at the end of June 2014, up from Tk 10.19 a year ago.
“The bourse should have a lucrative EPS and NAV so that reputed foreign and local organisations are encouraged to become shareholders of DSE,” the board member said.
As per the demutualisation scheme, 60 percent shares of the bourse have been kept in a block account for strategic and institutional investors and the general public. The rest 40 percent were allotted to existing shareholders.
The existing shareholders think that it will be more profitable to sell the shares at higher prices to the strategic, institutional and general investors, instead of receiving cash dividends at the moment.
After demutualisation, which converted the bourse from a mutual organisation to a corporate entity owned by shareholders, DSE’s paid-up capital stood at Tk 180.38 crore.