IPO fundraising hits 10-year high

Corporate fundraising through initial public offerings in Bangladesh in 2021 reached Tk 1,658.44 crore, the highest after 2011.

In 2011, a total of 13 companies raised Tk 1,678 crore through IPOs.

Fourteen companies raised Tk 1,233.44 crore while BEXIMCO raised Tk 425 crore through a Sukuk IPO in 2021.

Eleven companies have raised funds using the fixed price IPO method.

Union Bank raised Tk 428 crore, eGeneration Tk 15 crore, Taufika Foods Tk 30 crore, NRB Commercial Bank Tk 120 crore, Desh General Insurance Tk 16 crore, Sonali Life Insurance Tk 19 crore, South Bangla Agriculture & Commercial Bank Tk 1 crore, Sena Kalyan Insurance Tk 16 crore, ACME Pesticides Tk 30 crore, Union Insurance Tk 19.36 crore and BD Thai Food & Beverage Tk 15 crore.

Union Bank raised Tk 428 crore from the public, which was the largest IPO in the banking industry.

Among all the sectors, it was the fourth largest IPO after Robi Axiata Tk 523 crore, Grameenphone Tk 486 crore and MJL Bangladesh Tk 460 crore.

Three companies that raised funds through the bookbuilding method are Lub-rref Tk 150 crore, Index Agro Industries Tk 50 crore and Baraka Patenga Power Tk 225 crore.

Bangladesh Securities and Exchange Commission Commissioner Shaikh Shamsuddin Ahmed told New Age that the regulator has decided not to hold any IPO applications for a long time.

“We will provide all the necessary supports for the most successful companies for their market introduction,” he said.

Companies can benefit from their listing on the stock exchange and this listing would enrich the market, he said.

Equity market analyst and University of Dhaka Honorary Professor Abu Ahmed said the market is struggling due to a dearth of top companies and there is no choice but to to bring in good companies to ensure a stable market.

Fundamentally weak small businesses can only create havoc in the market, he said.

He said there were very few companies in the market for long-term investment.

The regulator should adopt various strategies, including incentive packages, to list good companies, he said.

Fundraising through IPOs hit a record high in 2021 due to rapid approval of pending IPOs.

The Bangladesh Securities and Exchange Commission has decided to make decisions on any IPO application as soon as possible.

For example, the BSEC last year issued positive or negative decisions on IPO applications that had been pending for years.

Moreover, the market has remained bullish over the past two years, which has encouraged companies to come on the stock market.

The DSEX, the key index of the Dhaka Stock Exchange, rose 1,354.6 points in 2021 to close at 6,756.65 points on December 30 after gaining 950 points the previous year.

The BSEC, with the help of the Ministry of Finance, has also pressured banks and insurance companies to list on the market in accordance with their regulatory obligations.

But, raising capital in the capital market is not easy as it could take years to complete the process, they said.

Fundraising through IPOs bottomed out in 2017, prompting regulators to take initiatives to improve the IPO situation.

According to market experts, large companies are reluctant to list in the capital market because the market lacks incentives and benefits and has many rules and regulations.

Capital market fund raising totaled Tk 985 crore in 2020, Tk 552 crore in 2019, Tk 646 crore in 2018, Tk 219 crore in 2017, Tk 849 crore in 2016, Tk 830.72 crore in 2015 and 1 Tk 263.62 crore in 2014, Tk 830 crore in 2013 and Tk 1,208 crore in 2012.

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