Fund raising by companies from the capital market through initial public offering is likely to increase in the year 2017 amid the improving market scenario for more than half a year after hitting a six-year low last year, statistics of the Dhaka and Chittagong stock exchanges suggest.
As of January 30, the first month of the year, IPO proposals of 18 companies were already at different stages for getting approval from the Bangladesh Securities and Exchange Companies, sources told New Age.
The cumulative target of the companies is to raise Tk 813 crore from the capital market.
Officials of the bourses, however, say the figure will rise gradually during the upcoming 11 months of the year when more companies will start proceedings to get regulatory approval for fund raising.
Fund raising from the capital market hit a six-year low in 2016 as only eight companies raised Tk 659.30 crore from the capital market during the period.
According to officials of the stock exchanges and BSEC, stricter public issue rules that was amended in December 2015 was the main reason behind the fall in fund raising from the capital market through IPO last year.
It took time for the companies to fulfil the requirements of the newly-amended public issue rules and start fresh procedure to get BSEC’s approval, they say.
Besides, gradual improvement in the market situation during the second half of the 2016 might be among other reason behind the number of IPO seeking companies to get the advantage of the market improvement, the officials say.
Floating shares in the capital market is comparatively easier when the market remains bullish, they said.
Of the companies in the IPO pipeline, proposals of nine companies were in the process to pool Tk 181 crore through fixed price method, while other nine were in the process to raise Tk 632 crore under book building method.
Of the companies, Dhaka Regency Hotel & Resort proposed to raise Tk 20 crore under book-building method, while STS Holding 17 crore, Bashundhara Paper Tk 200 crore, Aman Cotton Fibrous Tk 80 crore, Runner Auto Tk 100 crore, Bengal Poly & Paper Sacks Tk 55 crore, Popular Pharmaceuticals Tk 70 crore, Index Agro Tk 40 crore and Delta Hospital Tk 50 crore.
Apart from the companies, VFS Thread Dyeing was in the process to raise Tk 22 crore under fixed price method, while Oimex Electrode Tk 15 crore, Intraco Refuelling Tk 20 crore, BBS Cables Tk 20 crore, Amulet Pharmaceuticals Tk 15 crore, Indo Bangle Tk 20 crore, Nahee Aluminium Tk 15 crore, GENEX Infosis Tk 20 crore and Kattoli Textile Tk 34 crore.
Apart from approval to a number of MFs, the commission has already allowed a Tk 43-crore IPO proposal of Nurani Dyeing & Sweaters under fixed price method in February this year.
In 2015 nine companies raised Tk 675.72 crore from the market, while fund raising by 16 companies was Tk 1,158.10 crore in 2011.
Fund raising from the capital market was Tk 730.50 crore, Tk 1,333.91 crore and Tk 1.263.62 crore respectively in 2012, 2013 and 2014.
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