A total of 15 companies are waiting for approval from the Bangladesh Securities and Exchange Commission to raise upwards of Tk 500 crore by offloading shares through initial public offerings (IPOs).
An IPO refers to the process of offering shares of a private corporation to the public in a new stock issuance.
Of the firms, 14 companies are expected to raise Tk 425 crore by issuing shares at Tk 10 each. The other company would raise Tk 75 crore under the book-building method.
Under the book-building method, the company going public offers a price band on shares to investors.
Investors then bid on the shares before the final price is settled once the bidding has closed. Investors must specify the number of shares they want to buy and how much they are willing to pay.
The lowest share price is known as the floor price, while the highest share price is known as the cap price. The final share price is determined using investor bids.
The stock market regulator is supposed to reject or approve the proposals within 90 days of application as per the capital issue rules.
“The commission tries to give approval as soon as possible, but sometimes it takes time as there is information missing in the IPO application, or some points may need further clarification,” Rezaul Karim, spokesperson of BSEC, told Dhaka Tribune.
If a company places the IPO prospectus while complying with all the rules and regulations and provides the proper documents, it will get approval without any delay, he said.
Last year, the stock market regulator gave the nod to 19 companies -- including the long-awaited Robi -- for raising Tk 1,580 crore by offloading shares to the public, which is more than double that from the previous year.
The BSEC last year also rejected the IPO applications of seven companies for violating the securities rules after the Shibli Rubayet ul Islam took charge of the stock market regulatory body in May that year.
Of the 15 companies that are gearing up to go public, four have re-applied: JMI Hospital Request, Master Feed Agrotech, Beka Garments and Three Angle Marine.
JMI Hospital intends to raise Tk 75 crore under the book-building method.
Master Feed Agrotec wants to raise Tk 30 crore, Beka Garments and Textiles Tk 35 crore and Three Angle Marine Tk 32 crore, all at the fixed price of Tk 10 a share.
The other companies are South Bangla Agriculture and Commerce Bank, which wants to raise Tk 100 crore, Anik Trims Tk 30 crore, Union Insurance Tk 19.4 crore, BD Paints Tk 20 crore, Subra Systems Tk 30 crore, BD Thai Food and Beverage Tk 15 crore, Oryza Agro Industries Tk 25 crore, Krishibid Feed Tk 30 crore and Acme Pesticides Tk 30 crore at the fixed price.
Besides, Krishibid Seed wants to raise Tk 16 crore and Nialco Alloys Tk 7.5 crore from the stock market through listing on the small-cap platform.
According to the information in their IPO prospectuses, most of the companies wished to raise funds to repay long-term bank loans and to expand their existing business capacity in line with the growing demand for their respective products.
Meanwhile, the BSEC on December 31 last year decided to scrap the lottery system introduced for general investors in an IPO and allow every applicant to get shares on a pro-rata basis.
It ruled that every IPO applicant will get shares if they have a minimum secondary market investment of Tk 20,000.
But the decisions of the commission will be effective from April 1.
The stock market is a great source of funds for industrialisation, said Abu Ahmed, an honorary professor of the Dhaka University’s economics department.
“It will create more jobs, a crying need right now, and help to recover from the pandemic.”
The stock market regulator, stock exchanges and the issue managers also have key roles to play in attracting companies to get listed with the exchanges.
To attract private entrepreneurs, multinational companies, the government has to set an example by offloading shares of state-owned companies in the stock markets, said Ahmed, also a stock market analyst.
“Some multinational companies are doing business in our country but they are not listed with the bourses. However, they are publicly listed in neighbouring countries. They should be offered a tax waiver in the interest of our capital market.”
The more the multinational companies get listed, the more the country’s capital market becomes stable, he added.
