A Tk100 crore close-end mutual fund, sponsored by Prime Bank, will be floated very soon, an evidence of further intensifying the capital market depth.
The bank will subscribe at least 20 percent of the fund styled "Prime Bank 1st ICB Mutual Fund", according to a decision taken by the bank's Board of Directors recently.
The rest 80 percent of the fund, a 10-yearly one, will be raised through a placement prior to initial public offering (IPO)), or pre-IPO placement. Per unit price of the mutual fund will be Tk 10.
"We will float the mutual fund as soon as possible and we have already appointed the ICB Asset Management Company as fund manager," Sheikh Mortuza Ahmed, head of merchant banking and investment division of Prime Bank, told The Daily Star yesterday.
However, such a floating is subject to approval from the stock market regulator, Securities and Exchange Commission.
"Although we are yet to determine share-portions for pre-IPO placement and IPO, the portion will be market-oriented," Ahmed said.
New mutual funds, considered to be risk-free investment tools in the stock trading, means a more demand side for long term investment, Ahmed said.
"Moreover, the more mutual funds will help the market move from retailers-driven to institutional," he said, pointing to the high volatility in retailer-driven market.
Prime Bank is the latest among the private commercial banks (PCBs) that have already proposed to launch several mutual funds.
Eastern Bank, Trust Bank and IFIC Bank have already finalised the process to launch some close-end mutual funds this year.
The 'Eastern Bank First Mutual Fund' valued at Tk 100 crore will make its debut by this month, while the 'IFIC First Mutual Fund' worth Tk 100 crore and 'Trust Bank First Mutual Fund' worth Tk 200 crore is likely to enter the market by July.
Some other non-banking financial institutions and nationalised commercial banks are also striving to float mutual funds.
Presently, a total of 17 mutual funds are listed on bourses. Of them, ICB and its subsidiaries manage 13 mutual funds, AIMS Bangladesh three and BSRS one.
The Grameen Mutual Fund One: Scheme Two amounting to Tk 125 crore is the largest listed mutual fund and the ICB 2nd NRB Mutual Fund worth Tk 100 crore is the second.
At present, the mutual funds contribute 5.54 percent to the total market capitalisation.