IPO fundraising poised to scale up in 2018

Mostafizur Rahman | Published: 00:05, Jan 20,2018 | Updated: 01:17, Jan 20,2018

 
 

Fund raising through issuing initial public offering is going to increase this year after hitting a ten-year low last year as 22 companies have already applied for raising Tk 1,272.15 crore through IPOs.
The applications of the companies are at different stages for getting approval from the Bangladesh Securities and Exchange Commission, said BSEC officials.
The BSEC recently approved IPO proposals of Advent Pharmaceuticals (Tk 20 crore), Intraco Refueling Systems (Tk 20 crore) and Queen South Textile Mills (Tk 15 crore) and the companies will raise the fund soon under the fixed price method of the IPO, they said.
Moreover, the regulator also approved prospectuses of Bashundara Paper Mills and Aman Cotton to raise Tk 200 crore and Tk 80 crore respectively under the book building method and the companies will soon get nod from the commission for bidding, said BSEC officials.
The figure will rise gradually in the upcoming months of the year when more companies will place proposals to get regulatory approval for fund raising, they said.
Fund raising through IPO came down to bottom in 2017 as only seven companies raised Tk 119.25 crore from the capital market during the period, hitting a decade low.
According to officials of the stock exchanges and BSEC, stricter public issue rules that were amended in December 2015 were the main reason for the fall in fund raising from the capital market through IPO last year.
Of the companies which are in the IPO pipeline, 11 companies seek to pool Tk 290.29 crore through the fixed price method, while the rest to raise Tk 981.86 crore under the book building method.
As the market remained upward over the year, more and more companies have got interested to float shares in the capital market as floating shares is comparatively easier when the market is bullish, officials said.
New Line Clothing has applied to raise Tk 30 crore, Silco Pharmaceuticals Tk 30 crore, Electro Battery Company Tk 22.50 crore, ML Dying Tk 20 crore and SS Steel Tk 25 crore, Kattali Textiles Tk 34 Crore, Express Insurance Limited Tk 26.79 crore, Silva Pharmaceuticals Tk 30 crore, SK Trims & Industries Tk 30 crore, GENEX Infosis Tk 20 crore under the fixed price method in the year 2017.
Besides, Lub-rref (Bangladesh) has applied to raise Tk 150 crore, Energypac Power Generation Tk 149.86 crore and ADN Telecom Tk 57 crore under the book building process in 2017.
Although more and more companies are showing interest to raise fund from the capital market in recent years, fundraising through IPO was worse in last two years.
Officials said a delay in giving approval to the IPOs of a number of companies contributed to the situation.
The IPO applications of nine companies which applied in 2016 also remain pending at the commission.
Of the nine companies, VFS Thread Dying sought to raise Tk 22 crore under the fixed price method while Dhaka Regency Hotel & Resort applied for raising Tk 60 crore, STS Holding Tk 75 crore, Shamsual Alamin Real Estate Tk 80 crore, Esquire Knit Composite Tk 150 crore, Runner Auto Tk 100 crore, Popular Pharmaceuticals Tk 70 crore, Delta Hospital Tk 50 crore and Index Agro Tk 40 crore under the book building method.
The BSEC, however, asked Index Agro to revise the asking amount as companies are not allowed to raise money through the book building process if they apply for less than Tk 50 crore.
Fund raising from the capital market was Tk 1,333.91 crore in 2013, Tk 675.72 crore in 2014, Tk 1.263.62 crore in 2015 and Tk 659.30 crore in 2016.

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