ICB Capital looks to overcome problems in listing of 13 state-run cos

ICB Capital Management is likely to organise a workshop this month to gauge possible solutions to problems that hinder the listing of state-owned companies on the bourses.

The issue manager is currently prioritising 13 companies, including national flag bearer Biman Bangladesh Airlines, for listing in the stock market from a list of 29 companies prepared in March.

Large paid-up capital of a company is one of the main barriers to listing.

Some of the companies received huge loans from the government on condition that the borrowed money would be converted to equity shares. As a result, their paid-up capital has ballooned raising concerns over the amount of cash that a company will have to pay to shareholders in the form of dividend after listing.

The workshop is expected to discuss possible dividend policy and other measures that can expedite the process of listing of the 13 companies, said chief executive officer of ICB Capital Management Mrs Mazeda Khatun.

Officials of the companies and the Financial Institutions Division are expected to attend the programme.

Apart from the issue over dividends, a decline in profits in the last fiscal year due to the currency devaluation and costlier raw materials has discouraged companies from offloading shares in the stock market, insiders say.

The 13 companies have been separated out from the list of 29, considering their profitability.

The paid-up capital of these companies hovers between Tk 50 million and Tk 20.82 billion.

ICB Capital Management earlier signed agreements with three firms -- Gas Transmission Company, BR Power Zone, and Gas Transmission Company Ltd. (GTCL) as their issue manager.

Another crucial factor that plays against the listing process is the transfer of top executives of the government entities. That keeps the whole process suspended.

For example, the chief of the audit committee of a state-owned company recently requested the committee not to keep the matter of listing in the agenda of the audit meeting that he would attend just before his transfer from the company.

Some of the state-owned companies issued sovereign bonds and the issue manager is yet to be clear about whether such companies have any legal restriction in offloading shares in the market.

The Bangladesh Securities and Exchange Commission (BSEC) sent a list of 29 state-owned companies to the Prime Minister's Office (PMO) in March seeking its intervention for speeding up the listing of the companies.

On completion of a research, the regulator selected the companies in the areas of insurance, refinery, cables, telephone, drugs and alcohol businesses, considering their performance, profitability, and their potential to contribute to the market's growth.

"A top official of the PMO has assured us of convincing the companies to offload shares," said a BSEC official.

Another BSEC official said disagreement between the boards of some companies and the ministries concerned was also holding back the listing process.

Presently, there are 22 state-owned entities listed in the country's stock market.

The companies include Investment Corporation of Bangladesh, Titas Gas Transmission & Distribution Company, Padma Oil Company, Power Grid Company of Bangladesh, Jamuna Oil Company, National Tea Company and Bangladesh Services.

They have 0.1 per cent to 1.7 per cent share of the total market capitalisation of the Dhaka Stock Exchange (DSE), according to IDLC Securities.

The government has the lowest stake of 4.30 per cent at National Tea Company whereas the highest stake is 99.68 per cent at Bangladesh Services.

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