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The Financial Express

Move to speed up process to list small-cap companies

| Updated: March 02, 2021 09:38:18


Move to speed up process to list small-cap companies

The securities regulator will sit with some small-cap companies this week to discuss their listing with the bourses under the SME board introduced earlier to facilitate the raising of capital by such companies.

The Bangladesh Securities and Exchange Commission (BSEC) has taken the initiative following the completion of necessary preparation required to open operations of the SME boards on both the stock exchanges of the country.

"After introduction of rules for the SME board, the stock exchanges have developed software to conduct trading of the shares in the small-cap companies. We will sit with some companies this week to accelerate their listing process," said Prof. Shaikh Shamsuddin Ahmed, a BSEC commissioner.

Necessary preparations have been completed at the regulatory end to make the SME boards functionable soon, he said.

"We will hold a meeting with some small-cap companies to know their expectations and preparations for raising capital through the SME boards," he added.

To accelerate the growth of small-cap companies, the securities regulator formulated rules titled 'Bangladesh Securities and Exchange Commission (Qualified Investor Offer by Small Cap Companies) Rules, 2018.

The companies' IPO (initial public offering) proposals will be allowed under both the fixed price and book-building methods.

After raising capital through qualified investor offer (QIO), a company's paid-up capital will be at least Tk 50 million and the figure would not cross Tk 300 million.

Three small-cap companies had earlier submitted IPO proposals for their listing under the SME boards.

Talking to the FE, a company official said they are yet to get the approval from the securities regulator for the IPO proposal.

In this regard, Mr. Ahmed said the incumbent commission has adopted a policy of clearing the pending IPO proposals without any delay.

"If the issuer itself fails to fulfill the queries in time, the regulatory approval for any IPO proposal might get delayed, if any," he said.

Mr Ahmed said the BSEC will sit with the small-cap companies to accelerate the process of listing with the SME board. "Hopefully, we will sit with them on Monday," he added.

According to the rules of the SME Platform, only the qualified investors can submit their intention to subscribe the issue offered by the SMEs for raising fund.

The qualified investors include merchant bankers and portfolio managers, asset management companies, mutual funds and collective investment scheme (CIS), stock dealers, banks, financial institutions, insurance companies, alternative investment fund managers, alternative investment funds, market makers, issuer of listed securities, resident or non-resident Bangladeshis, individuals having minimum net worth of Tk 10 million and other institutions as approved by the commission.

In early 2020, the Nialco Alloys, a manufacturer of grade bronze and brass ingots, submitted its IPO proposal to be listed with the SME board.

The company will raise a capital worth Tk 100 million through the SME board of the Chittagong Stock Exchange (CSE).

Two other small-cap companies -- Krishibid Seed and Annex Suites -- had also taken initiatives to raise capital through SME platform.

An official of the MTB Capital, the issue manager, said Krishibid Seed submitted its IPO proposal to be listed with the SME boards of both the bourses.

As per the agreement signed with issue manager, Krishibid Seed, a private limited company of Krishibid Group, will raise a capital worth Tk 150 million by offloading 15 million ordinary shares at an offer price of Tk 10 each under the fixed price method.

The country's premier bourse introduced the V-Next online platform in May 2019 for the SMEs who are looking for foreign investors.

The platform was introduced through a mega programme targeting the foreign investors interested to invest in local SMEs.

Earlier, the Dhaka Stock Exchange (DSE) said some 10 small-cap companies are in the pipeline to get listed on the DSE's SME platform.

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