BSEC orders probe into Agni Systems share price surge
The BSEC noted that the share price and trading volume of Agni Systems had fluctuated significantly in recent times, which it found suspicious
The Bangladesh Securities and Exchange Commission (BSEC) has instructed the Dhaka Stock Exchange (DSE) to investigate the unusual price and volume movements in the shares of Agni Systems Limited, an internet service provider.
The commission issued a formal letter to relevant parties last Wednesday.
The BSEC noted that the share price and trading volume of Agni Systems had fluctuated significantly in recent times, which it found suspicious.
As a result, the BSEC has called for a thorough investigation into the company's trading activity between 26 July and 9 October of this year. The purpose of the investigation is to determine whether market manipulation, insider trading, or other market abuses contributed to the unusual movement in the company's stock.
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The investigation team from the Dhaka bourse has been directed to submit a report to BSEC's surveillance department within 30 working days.
On 26 July, the stock of Agni Systems was priced at Tk24.90 on the DSE, but by last Wednesday, it rose by 65.46%, reaching Tk41.20. The BSEC found this price surge unusual, especially given the country's ongoing economic uncertainty.
What raised concerns for the regulator is that Agni Systems did not release any significant information or updates about its business that would justify such a sharp rise in the share price. Therefore, the BSEC has emphasised the need to uncover the reasons behind this unusual price movement, suggesting the possibility of market manipulation or other irregularities.
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim stated that the commission has identified some concerns and directed the DSE to investigate. He added that once the BSEC receives the investigation report, it will take further action if any irregularities are found.
Agni Systems has been providing internet access since 1995, and it is a pioneering nationwide internet service provider in Bangladesh. The company was listed on the stock exchanges in 2003.
The main business of the company is to render service of electronic mail, internet access, electronic data communication, computer networking, software development, and to provide consultancy services for all types of computer software and communications.
In April 2021, the Bangladesh Securities and Exchange Commission (BSEC) restructured the board of directors of Agni Systems to protect investor interests and help the company return to a stable business position. As part of the move, the BSEC appointed two independent directors: Professor Mohammad Ridhwanul Haq from the Institute of Business Administration (IBA) at the University of Dhaka, and Assistant Professor Mansura Akter from the university's international business department.
Additionally, the BSEC instructed the Investment Corporation of Bangladesh, a shareholder in Agni Systems, to nominate a representative to the company's board of directors.
At the time, Agni Systems was required to reshuffle its board within 45 working days to comply with the 30% shareholding rule. However, the company failed to meet this requirement, as its sponsors and directors held only 9.39% of the company's shares, well below the required threshold.
After that in May 2022, LR Global Bangladesh Asset Management Company — an affiliate of the New York-based investment holding company LRG in Bangladesh — entered the board of Agni Systems by buying 8.96% shares through the secondary market.
They decided to appoint Reaz Islam, and Muhammad Omar Soeb Chowdhury as their directors, nominated by LR Global Bangladesh where Reaz Islam is the chief investment officer.
Agni Systems appointed both of them to meet the regulatory requirement of a minimum 30% shareholding by the sponsor-directors. At that time, the company's sponsor-directors held 23.81% of shares.
Now its sponsors and directors jointly hold 32.34% as of 30 September 2024, while institutions hold 17.69%, and the general public hold 49.97% shares of the company.
In the July to March period, the revenue of the company stood at Tk51 crore higher than Tk42 crore compared to the same period of the previous year.
Its profit after tax stood at Tk6.50 crore, which was Tk6.95 crore a year ago. Its earnings per share was Tk0.90, and its net asset value per share stood at Tk16.37 end of March 2024.
