Spotlight on rapid IPO, mandatory listings

FE REPORT | Thursday, 23 December 2021

Reduced timing of clearing IPO proposals, rules for mandatory listing and proper branding of listed companies are among lures that can inspire corporate entities to go public, experts say about market upgrading.

They cite as success stories that many corporates across the world achieved notable branding and valuation along with ensuring their longevity through the listing with stock exchanges.

Their suggestions came Tuesday at a conference titled 'Capital Market of Bangladesh: Prospects and Opportunities for Corporate Entities', arranged by Dhaka Stock Exchange (DSE) as part of the latest moves for resuscitating the stock market.

Representatives of different business groups, including Envoy, Rangs, Abdul Monem and Daffodil Family attended the conference held on the DSE premises.

Abdus Salam Murshedy MP, managing director at Envoy Group, observed many companies were unable to turn into corporate as they could not move toward 'we' from 'me' in a mindset induced by the business ambiance.

"We are lagging behind in case of faith. The companies should be facilitated in doing business properly as corporate entities by removing barriers, including bureaucratic tangles. Otherwise, new generations will not be interested in business," says Mr. Murshedy.

Chairman of the securities regulator Prof Shibli Rubayat Ul Islam told the meet that regulatory approval for an IPO (initial public offering) proposal would not be delayed if the company submits its proposal properly.

He mentions that the securities regulator has to find out discrepancies despites the companies having prepared IPO proposals in line with checklists in this regard.

"Why will the regulatory approval to an IPO proposal be delayed? A company can get our approval within two weeks if its IPO proposal is submitted properly," Mr Islam said.

He comments that only five-per cent unscrupulous persons are behind all problems created everywhere.

"We are working for the remaining 95 per cent."

He said statistics show how much the country's stock market is lagging behind other countries in terms of market cap-to-GDP ratio.

"Nevertheless, many ones criticise the securities regulator following its approval to IPO proposals. We will have to ensure desired growth of the market through listing of more companies," said Mr Islam.

ASM Mainuddin Monem, managing director at Abdul Monem Group, quipped that companies take bank loans at around 15-per cent interest instead of raising funds from the stock market.

"Those companies are working for banks, not for themselves. A company cannot survive taking bank loans at high interest," Mr Monem told the meet.

He thinks banks should not finance running business. "The central bank should regulate the banks in cooperation with the securities regulator."

The corporate boss assures of listing two companies of Monem Group within next one year.

"The time of ensuring a company's listing should be reduced along with easing the preparing of books."

Ms Romana Rouf Chowdhury, a director of Rangs Groups, finds corporate entities unwilling to face hassles of rules and regulations set for listing with stock exchanges.

"We are not inspired to raise fund from the stock market due to the scope of easy financing by banks," she says.

She said the fluctuation of share prices after the listing of a company is also another reason behind its reluctance in going public.

"Stock exchanges should talk to corporate entities in a bid to make them convinced in offloading shares," Ms Chowdhury suggests as a confidence-building measure.

In his speech, Md. Sabur Khan, chairman of Daffodil Family, laid importance on the listing of more IT companies.

"Stock exchanges should enhance relationship with IT companies as they are not aware of rules and regulations developed so far by the regulator and stock exchanges," Mr Khan said while speaking on proper brand value of a listed company.

Md. Shakil Rizvi, a DSE director, said many companies are yet to realise that a company's valuation increases after going public.

Md. Rezaul Karim, an executive director at the securities regulator, said availability of bank loans is one of the reasons hindering the listing of a significant number of companies.

"Rules can be framed for mandatory listing of a company which has already received bank financing worth Tk 5.0 billion," Mr Karim suggests.

Matiur Rahman, chairman of Uttara Motors, says many companies can be brought under counseling along with introducing insurance coverage for loss of capital gains in an effort to inspire more companies to go public.

Dr Shaikh Shamsuddin Ahmed, a BSEC commissioner, Md. Saifur Rahman, a BSEC executive director, and Tarique Amin Bhuiyan, DSE managing director, among others, spoke at the conference.

The DSE chief operating officer M. Shaifur Rahman Mazumdar presented his keynote speech at the conference.

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