Next at the Bangabandhu International Conference Centre at the Sher-e-Bangla Nagar in Dhaka, President of the DSE Rakibur Rahman confirmed Wednesday. The trading of the GP shares on the bourses is expected to begin by November 15 next.
The Scheule for IFIC Bank First Mutual Fund Lottery:
Date:March 09, 2010
Time: (10:30 AM)
Venue: Bangabandhu International Conference Centre
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IIFIC Bank 1st Mutual FundSIZE OF THE FUND:Tk.1,200,000,000 divided into 120,000,000 units at par value of Tk. 10 eachSPONSOR’S CONTRIBUTION: 25,000,000 Units of Tk. 10 each at par for Tk. 250,000,000PRE IPO PLACEMENT: 55,000,000 Units of Tk. 10 each at par for Tk. 550,000,000PUBLIC OFFER : 40,000,000 Units of Tk. 10 each at par for Tk. 400,000,000RESERVED FOR MUTUAL FUNDS: 4,000,000 Units of Tk. 10 each at par for Tk. 40,000,000NON RESIDENT BANGLADESHIS: 4,000,000 Units of Tk. 10 each at par for Tk. 40,000,000RESIDENT BANGLADESHIS: 32,000,000 Units of Tk. 10 each at par for Tk. 320,000,000This Offer Document sets forth concisely the informationabout the fund that a prospective investor ought to knowbefore investing. This Offer Document should be readbefore making an application for the Units and shouldbe retained for future reference.The particulars of the fund have been prepared inaccordance with as amended till date and filed withSecurities and Exchange Commission of Bangladesh.The Issue/Fund shall be placed in “A” category.The Fund shall apply for listing with both the StockExchanges.SPONSOR :IFIC Bank LimitedTRUSTEE:Investment Corporation of Bangladesh (ICB)CUSTODIAN:Investment Corporation of Bangladesh (ICB)ASSET MANAGEMENT COMPANY:RACE Management PCLSubscriptionSubscription opens:February 7,2010Subscription closes: February 11,2010For Non-Resident Bangladeshissubscription closes on February 20,2010Date of Publication of Prospectus:January 11,2010IFIC BANK 1ST MUTUAL FUNDHighlights1. Name: IFIC Bank 1st Mutual Fund2. Size of the Fund: Tk. 1,200,000,000 divided into 120,000,000 units at par value of Tk. 10.00each. In future the fund size will not be changed.3. Face Value: Tk. 10.00 per unit.4. Nature: Closed-end Mutual Fund with a tenure of 10 years.5. Objective: The objective of the Fund is to provide attractive dividend to the unit holders by investing theproceeds in the various instruments in the Bangladeshi Capital Market and Money Market.6. Target Group: Individuals, institutions, non-resident Bangladeshis (NRB), mutual funds and collectiveinvestment schemes are eligible to apply for investment in the Fund.7. Dividend: Minimum 70% income of the Fund will be distributed as dividend in Bangladeshi Taka only at theend of each accounting year. The Fund shall create a dividend equalization reserve fund toensure consistency in dividend.8. Mode of Distribution: The dividend will be distributed within 30 days from the date of declaration.9. Transferability: Units are transferable. The transfer will be made by the CDBL under electronic settlementprocess.10. Encashment: The Fund will be listed with DSE and CSE. So investment in this Fund will easily be encashable.11. Tax Benefit: Income will be tax free up to certain level, which is permitted as per Finance Act. Investment inthe Fund would qualify for investment tax credit under section 44(2) of the Income Tax Ordinance1984.12. Report & Accounts: Every unit holder is entitled to receive annual report together with the yearly and half-yearlystatements of accounts as and when published.IFIC BANK 1ST MUTUAL FUNDRisk FactorsInvesting in the IFIC Bank 1st Mutual Fund (hereinafter the Fund) involves certain considerations in addition to the risks normallyassociated with making investments in securities. There can be no assurance that the Fund will achieve its investment objectives.The value of the Fund may go down as well as up and there can be no assurance that on redemption, or otherwise, investors willreceive the amount originally invested. Accordingly, the Fund is only suitable for investment by investors who understand therisks involved and who are willing and able to withstand the loss of their investments. In particular, prospective investors shouldconsider the following risks:1. In General: There is no assurance that the Fund will meet its investment objective; investors could lose money byinvesting in the Fund. As with all mutual funds, an investment in the Fund is not insured or guaranteed by theGovernment of Bangladesh or any other government agency.2. Market Price Risk: Stock prices and Mutual Fund prices generally fluctuate because of the interplay of the variousmarket forces that may affect a single issuer, industry, or market as a whole. The Fund may lose its value or experiencea substantial loss on its investments due to such market volatility.3. NAV Risk: Stock market trends show that prices of many listed securities move in unpredictable directions, which mayaffect the value of the Fund’s portfolio of listed securities. Depending on its exposure to such securities, the net assetvalue of units issued under this Fund can go up or down depending on various factors and forces affecting the capitalmarkets. Moreover, there is no guarantee that the market price of unit of the Fund will fully reflect their underlying netasset values.4. Issuer Risk: In addition to market and price risk, value of an individual security can, in addition, be subject to factorsunique or specific to the issuer, including but not limited to management malfeasance, lack of accounting transparency,management performance, management decision to take on financial leverage. Such risk can develop in anunpredictable fashion and can only be partially mitigated, and sometimes not at all, through research or due diligence.To the degree that the Fund is exposed to a security whose value declines due to issuer risk, the Fund’s value may beimpaired.5. Legal Risk: The Honorable High Court, in its verdict on November 8th, allowed mutual funds to expand their capitalbase by issuing bonus and rights shares or pay dividends through cash or bonus shares, without curbing the regulator’sabsolute power to determine which funds would be eligible to do so. However, although the case has been resolved bythe High Court, the Securities and Exchange Commission still has the provision to appeal against the verdict with theAppellate Division of the Supreme Court and by exercising that option, the issue of dividends in any form may remainpending once again.6. Asset Allocation Risk: Due to a very thin secondary debt market in Bangladesh, it would be difficult for the FundManager to swap between asset classes, if and when required. In addition, limited availability of money marketinstruments in the market implies that there are only few opportunities for short term or temporary investments forthe Fund.7. Lack of Diversification Risk: Due to small number of listed securities in both the stock exchanges, it may be difficult toinvest the Fund’s assets in a widely diversified portfolio.8. Liquidation Risk: Market conditions and investment allocation may impact on the ability to sell securities during periodsof market volatility. The Fund may not be able to sell securities or instruments at the appropriate price and/or time.9. Dividend Risk: If the companies wherein the Fund will be invested fail to pay expected dividend, it may affect theoverall returns of the Fund.10. Investment Strategy Risk: The Fund is subject to management strategy risk because it is an actively managedinvestment portfolio.The AMC will apply investment techniques and risk analyses in making investment decisions forthe Fund, but there can be no guarantee that these techniques and analyses will produce the desired results.11. Socio-Political & Natural Disaster Risk: Uncertainties resulting from political and social instability may affect the valueof the Fund’s Assets. In addition, adverse natural climatic condition may hamper the performance of the Fund.IFIC BANK 1ST MUTUAL FUND1. PRELIMINARY1.1. PUBLICATION OF PROSPECTUS FOR PUBLIC OFFERING:RACE Management PCL has received Registration Certificate from the Securities and Exchange Commission (SEC) under theconsistency in dividend.5) The Asset Management Company shall dispatch the dividend warrants at the expense of the Fund, within 30 days of thedeclaration of the dividend and shall submit a statement within next 7 (seven) days to the Commission, the Trustee and theCustodian.6) Before record of ownership by the CDBL, a transferee shall not possess the right to any dividend declared by the Fund.Total NAV——————————-No. of units outstandingIFIC BANK 1ST MUTUAL FUND4. RISK CONSIDERATIONS4.1. RISK FACTORS:Investing in the IFIC Bank 1st Mutual Fund (hereinafter the Fund) involves certain considerations in addition to the risks normallyassociated with making investments in securities. There can be no assurance that the Fund will achieve its investmentobjectives. The value of the Fund may go down as well as up and there can be no assurance that on redemption, or otherwise,investors will receive the amount originally invested. Accordingly, the Fund is only suitable for investment by investors whounderstand the risks involved and who are willing and able to withstand the loss of their investments. In particular, prospectiveinvestors should consider the following risks:1. In General: There is no assurance that the Fund will meet its investment objective; investors could lose money byinvesting in the Fund. As with all mutual funds, an investment in the Fund is not insured or guaranteed by theGovernment of Bangladesh or any other government agency.2. Market Price Risk: Stock prices and Mutual Fund prices generally fluctuate because of the interplay of the variousmarket forces that may affect a single issuer, industry, or market as a whole. The Fund may lose its value or experiencea substantial loss on its investments due to such market volatility.3. NAV Risk: Stock market trends show that prices of many listed securities move in unpredictable directions, which mayaffect the value of the Fund’s securities of listed securities. Depending on its exposure to such securities, the net assetvalue of units issued under this Fund can go up or down depending on various factors and forces affecting the capitalmarkets. Moreover, there is no guarantee that the market price of unit of the Fund will fully reflect their underlying netasset values.4. Issuer Risk: In addition to market and price risk, value of an individual security can, in addition, be subject to factorsunique or specific to the issuer, including but not limited to management malfeasance, lack of accounting transparency,management performance, management decision to take on financial leverage. Such risk can develop in anunpredictable fashion and can only be partially mitigated, and sometimes not at all, through research or due diligence.To the degree that the Fund is exposed to a security whose value declines due to issuer risk, the Fund’s value may beimpaired.5. Legal Risk: The Honorable High Court, in its verdict on November 8th, allowed mutual funds to expand their capitalbase by issuing bonus and rights shares or pay dividends through cash or bonus shares, without curbing the regulator’sabsolute power to determine which funds would be eligible to do so. However, although the case has been resolved bythe High Court, the Securities and Exchange Commission still has the provision to appeal against the verdict with theAppellate Division of the Supreme Court and by exercising that option, the issue of dividends in any form may remainpending once again.6. Asset Allocation Risk: Due to a very thin secondary debt market in Bangladesh, it would be difficult for the FundManager to swap between asset classes, if and when required. In addition, limited availability of money marketinstruments in the market implies that there are only few opportunities for short term or temporary investments forthe Fund.7. Lack of Diversification Risk: Due to small number of listed securities in both the stock exchanges, it may be difficult toinvest the Fund’s assets in a widely diversified portfolio.8. Liquidation Risk: Market conditions and investment allocation may impact on the ability to sell securities during periodsof market volatility. The Fund may not be able to sell securities or instruments at the appropriate price and/or time.9. Dividend Risk: If the companies wherein the Fund will be invested fail to pay expected dividend, it may affect theoverall returns of the Fund.10. Investment Strategy Risk: The Fund is subject to management strategy risk because it is an actively managedinvestment portfolio. The AMC will apply investment techniques and risk analyses in making investment decisions forthe Fund, but there can be no guarantee that these techniques and analyses will produce the desired results.11. Socio-Political & Natural Disaster Risk: Uncertainties resulting from political and social instability may affect the valueof the Fund’s Assets. In addition, adverse natural climatic condition may hamper the performance of the Fund.IFIC BANK 1ST MUTUAL FUND4.2. EXPECTED MARKET PERFORMANCE OF THE FUND:1) It is expected that demand for the IFIC Bank 1st Mutual Fund units will always rule over supply.2) Brand name of IFIC Bank Limited and Trustee, ICB’s track record in the successful marketing of several mutual funds in thepast may motivate investors to invest in this Fund.3) World class investment management team of the RACE Management PCL as a new-generation Asset Management Company(AMC) would attract investors to invest in this Fund.4.3. WHO SHOULD INVEST AND HOW MUCH TO INVEST:1) Individuals who do not have tolerance of bearing risk and know nothing about the functioning of the capital market neednot apply for the units of the Fund.2) Individuals who are looking for long-term capital growth and consistent dividend payment and are comfortable with therisks associated with equity investments should consider investing in the Fund.3) An individual should also consider investing in the Fund if he/she can accept some variability of returns, have a moderatetolerance for risk and are planning to invest in the Fund over the medium to long-term.4) Considering other factors like the investment opportunities available in the market, return expectation, income level andconsumption pattern, one may put only a portion of his/her total portfolio into the Fund.IFIC BANK 1ST MUTUAL FUND5. FORMATION, MANAGEMENT AND ADMINISTRATION5.1. SPONSOR OF THE FUND:IFIC Bank Limited is a first-generation private commercial bank with 82 (eighty two) branches across various regions inBangladesh. With its stock listed on both Dhaka and Chittagong Stock Exchanges, IFIC Bank Ltd. offers a full range of commercialbanking products and services to corporate, middle-market and retail segments. Being one of the oldest private commercialbanks, IFIC Bank has unique insights into the dynamics in the corporate and financial sector. The Bank strongly believes that thestock market in Bangladesh is entering a secular growth phase and is becoming an attractive destination for both savings andinvestment capital in Bangladesh. As a result, IFIC is increasing its presence in the Bangladeshi stock market and has recentlystarted stock trading and brokerage services for its clients.IFIC Bank is the first first-generation bank to sponsor a mutual fund, believing that IFIC Bank 1st Mutual Fund will play a positiverole in developing the Bangladeshi Mutual Fund industry. With that in mind, IFIC Bank has appointed RACE Management PCL asthe Fund Manager. RACE Management is a next-generation asset management company has successfully launched the EBL FirstMutual Fund, the first-ever bank sponsored mutual fund in Bangladesh.5.2. TRUSTEE & CUSTODIAN OF THE FUND:In order to ensure maximum trust and confidence of the investors, supervisory bodies and potential investors in the fund, theInvestment Corporation of Bangladesh (ICB) will act as the Trustee and Custodian of the Fund.The Investment Corporation of Bangladesh (ICB) was established on 01 October 1976, under “The Investment Corporation ofBangladesh” Ordinance, 1976 (No. XL of 1976) to encourage and broaden the base of investment, develop the capital market,mobilize savings, promote and establish subsidiaries for business development and provide for matters ancillary thereto. Overthe years, the activities of ICB have grown manifold, particularly in Merchant Banking, Mutual Funds operations and stockbrokerage activities. ICB is the biggest investment bank and the harbinger of mutual fund industry in the country. Out ofcountry’s 17 (seventeen) closed-end mutual funds, ICB and its subsidiary manage 13 (thirteen) mutual funds.As of August 2009, ICB has acted as Trustee to the 11 debenture issuances involving Tk. 155.95 crores, issues of 8 bond issuancesinvolving Tk. 817 crores. ICB also performed the responsibilities of trustee and custodian to 9 closed-end mutual funds of Tk. 475crores and 2 open-end mutual funds with initial capital of Tk. 40 crores.5.3. ASSET MANAGER OF THE FUND:RACE Management PCL (hereinafter RACE) will act as the Asset Manager of the Fund. RACE is a second-generation assetmanagement company, receiving its Asset Management license in September 2008 after fulfilling rigorous due diligencerequirements of the SEC. RACE Management has already established a successful track record by launching the first-evercommercial bank sponsored mutual fund, EBL First Mutual Fund and is the only second generation asset management companyto have a mutual fund under management in Bangladesh.The RACE Team: With about 30 professionals, RACE has one of the largest asset management teams in Bangladesh whichincludes (1) senior Bangladeshi investment professionals with world-class training and over a decade of experience ininvestment management and research in some of the worlds’ most developed capital markets; (2) Senior Bangladeshiprofessionals from the local banking and financial services industry with strong operational experience and an extensive contactbase among the local business community; (3) a cadre of young professionals who have gained unique insights into the localcapital markets through the application of sophisticated investment techniques and on-the-ground research.The investment management operation of RACE is managed by a team of investment professionals and is guided by anInvestment Committee. The Investment Committee reviews the Fund portfolio selection process to ensure compliance with theobjectives set out in the Trust Deed. In addition, the RACE Investment Committee pays special regard to guidelines regardingrestriction on investments/investment limits as prescribed from time to time; these restrictions relate to single company/groupinvestments, investments in associate companies, investments in unrated debt instruments etc. In addition, the RACEInvestment Committee also reviews the portfolio periodically to assess liquidity positions and evaluate the risk parameters andwill, from time to time, rebalance the portfolio.IFIC BANK 1ST MUTUAL FUNDRACE Approach to Fund Management: Highly Process-Driven Investment ApproachA flexible yet disciplined investment process is the hallmark of a professional investment management fund. Incorporating theintellectual capital and collective experience of the RACE’s senior investment professionals, RACE has developed a 7-stepinvestment process:Step 1: Universe Selection. The first step of the investment process begins with identifying the universe of stocks. Thesestocks are then classified in four categories based on RACE’s proprietary selection methodology.Step 2: Focus List. The universe of stock is then narrowed down to build a prospective focus list. This step is usually done inphases. The first phase involves narrowing down the list through RACE’s proprietary filtering process. The second phaseinvolves narrowing the list further through the fundamental research inputs.Step 3: “Top Down” Analysis involves analysis of macroeconomic trends, analysis on broad market indices, analysis of fundflow trend to formulate sector biases and sector allocations.Step 4: “Bottoms Up” Company Analysis. This step involves a combination of individual security analysis based on multipleparameters, including valuation, qualitative analysis to identify business trends, competitive outlook and corporatemanagement. These analyses are supplemented by company visits and information exchange with management.Step 5: Portfolio Construction. The next step is to create an optimum portfolio with the goal of maximizing returns andminimizing risk.Step 6: Risk Management. This step applies the pre-determined position limits to the portfolio, limiting sector exposure andindividual stock exposure. Maintaining lower volatility is also an important concern; to this end, beta adjustment and othersophisticated risk analysis is used.Step 7: Trade Execution: RACE uses a combination of quantitative strategies and market information to maximize its tradeexecutions. To this end, RACE has selected a panel of brokers to execute its trades in an efficient and confidential manner.5.4. AUDITORS:The Trustee, ICB has appointed Hoda Vasi Chowdhury & Co. Chartered Accountants as the Auditor of the Fund for the first year.It is one of the reputed and oldest audit firms of the country and is associated with world-renowned Deloitte Touche Tohmatsu.The Trustee will continue to appoint the Fund Auditor throughout the tenure of the Fund.5.5. LIMITATION OF EXPENSES:1) The initial issue expenses in respect of the Fund shall not exceed 5% of the Fund to be raised, the details of which areprovided in this Prospectus.2) The total expenses charged to the Fund except the amortization of initial issue expenses including transactions cost in theform of stock brokerage against buy and sell of securities forming a part of acquisition or disposal cost of such securities,transaction fees payable to the Custodian against acquisition or disposal of securities, CDBL Charges, listing fees payable tothe stock exchanges, the annual registration fees payable to the Commission, audit fees, cost for publication of reports andperiodicals, bank charge, etc., shall not exceed 4% of the weekly average net assets outstanding during any accounting yearor as may be determined by the Rules.IFIC BANK 1ST MUTUAL FUND5.6. FEES AND EXPENSES:The Fund will pay the fees of Asset Management Company, the Trustee and the Custodian together with any other fees,commissions and expenses as may arise from time to time. The Fund will bear its own costs and expenses incurred/accrued inconnection with its formation, promotion, registration, public offering, listing together with certain other costs and expensesincurred in its operation, including without limitation, expenses of legal and consulting services, auditing, other professional feesand expenses, brokerage, share/debenture registration expenses, guarantee or underwriting commission and fees due to theSEC. The Fund will also bear all other incidental expenses including printing, publication and stationery relating to its smooth andfair operation.RACE has estimated the normal annual operating expenses of the Fund will not exceed 4% of the average NAV of the Fund.However, there may be variation in the actual operating expenses of the Fund. Major expenses of the Fund are detailed asfollows:1) Issue and Formation Expenses: Issue and formation expenses are estimated to be not over 5% of the total Fund size. Theexpenses will be amortized within 10 (ten) years on a straight-line method. The estimated expenses for the issue andformation of the Fund are presented below:1. Banker to the issue fee/Collection Charge : 0.60 percent2. Formation Fee Payable to AMC : 1.00 percent3. Printing & Publication : 0.60 percent3. Legal Expenses (Listing Fees, registration Fees etc.) : 1.20 percent4. Other expenses : 0.80 percentTotal : 4.20 percent2) Management Fee: As per িসিকউির
