Bangladesh regulator unlikely to stop issuing IPOs despite sluggish market

The securities regulator is unlikely to put off the process of bringing new IPOs (initial public offerings) in the capital market amid the recent trend of poor transactions.

One of the commissioners at the Bangladesh Securities and Exchange Commission (BSEC) made the observation as different market operators suggested not to approve IPOs due to the ongoing down trend in the secondary market.

"We are not in favour of going slowly or putting off the IPO proposals," commissioner Dr. Shaikh Shamsuddin Ahmed told the FE.

"We're eagerly waiting for quality IPOs which will be cleared as per the normal procedure and without any delay," he said, apparently rejecting the idea of holding back the IPO processing.

He also informed that the regulator did not have sufficient IPO proposals at present.

"We've requested some companies, which submitted IPO proposals, to fulfill the deficiencies. The proposals will be approved at any time subject to fulfillment of the deficiencies," said Mr. Ahmed.

After January 26 last, the daily turnover on Dhaka Stock Exchange (DSE) came down below Tk 10 billion and the DSE broad index (DSEX) shed 180 points as on Thursday last.

President of the Bangladesh Merchant Bankers Association (BMBA) Md. Sayadur Rahman said that many operators and few experts suggested putting off the IPO process due to the sluggish market trend.

"But, I found, no IPO has so far been under subscribed," he said. "Moreover, the IPO shares were traded at double the prices."

According to the BSEC, there were 11 IPO proposals worth Tk 4.18 billion remained under scrutiny of the regulator as on Thursday last.

BSEC commissioner Mr. Ahmed said the regulator had to deal with 26 IPO proposals in last six months, when it approved two to three IPOs in a month.

"Without putting off the IPOs, what we can do at best is to defer the public subscription period of a company subject to their application," he said.

On February 24 last, the regulator decided to defer the IPO subscription period for Sonali Life Insurance from March, 2021 to May, 2021 considering the company's plea and investors' interest, said the BSEC officials.

BMBA president Mr. Rahman said that the suggestion for holding off the IPOs was not justified. "The problem with the secondary market will not go unless the shares of newly listed companies are traded at fair prices," he said.

He viewed that the market players would not be able to manipulate the share price of a newly listed company if the shares of all categories are brought for debut trading.

Of the IPO proposals presently remained pending with the BSEC, South Bangla Agriculture and Commerce (SBAC) Bank will raise Tk 1.0 billion, Anik Trims Tk 300 million, BD Thai Food & Beverage Tk 1,500 million, Oryza Agro Industries Tk 250 million.

The IPO proposal of SBAC Bank is likely to be approved at any time, said BSEC officials.

Krishibid Feed had withdrawn its IPO application in August 2020 and later resubmitted in October last to raise Tk 300 million under the fixed price method.

The BSEC earlier cancelled the IPO proposals worth Tk 1.27 billion submitted by three companies. The companies submitted again their revised proposals for consideration by the regulator.

Apart from the pending proposals, the securities regulator received new IPO proposals from only two companies - Subra Systems and Acme Pesticides - which will raise Tk 300 million each under the fixed price method.

[email protected]