Lack of confidence on capital market
Mahfuja Mukul: The entrepreneurs of the country also have not confidence on the securities market as the buyers of share have been declined due to the sluggish capital market in the recent months. Only six companies have collected fund from the capital market in 2022, which was 14 in 2021.
Bangladesh Securities and Exchange Commission (BSEC) chairman Professor Shibli Rubaiyat-ul-Islam led the commission under the leadership of two consecutive years through the initial public offer (IPO) from the stock market, but the trend did not continue in 2022, which is on the way out. Compared to the previous year, the number of companies going for IPOs has halved. In this, withdrawal of money through IPO has also collapsed.
The amount raised through IPO last year is almost half of that amount this year.
A review of the data shows that this year, six companies have withdrawn Tk 626 crore 26 lakh 10 thousand from the capital market in IPO. In 2021, the number of companies that raised money through IPO was 14. The institutions collectively withdraw money Tk 1 thousand 233 crore 26 lakh 9 thousand. That is, the number of companies coming to IPO has decreased by eight. Money withdrawal decreased by Tk 606 crore 99 lakh 99 thousand.
Earlier in 2020, various companies withdrew a record amount of Tk 1,296 crore 87 lakh 88 thousand from the capital market through IPO. A record amount of money was raised through IPOs during the year, but the picture at the beginning of the year was not good at all. The government has announced a general holiday for 66 consecutive days from March 26 to May 30 to prevent the spread of the epidemic coronavirus. As a result, stock market transactions are closed at this time.
Before that, in 2019, the regulatory body BSEC led by Khairul Hossain approved IPOs of weak companies one after another after complaints arose from various quarters. As a result, the stock market is affected overall. The most critical of these is the IPO approval of Coppertech Industries. At one stage BSEC decided not to issue a new IPO by holding a commission meeting on April 30, 2019, facing great criticism.
In that meeting, it was decided that no new applications related to IPOs will be taken from April 30 until the Securities and Exchange Commission (Public Issues) Rules 2015 are amended. However, within two and a half months of that decision, BSEC amended the Public Issue Rules 2015 by increasing the quota of general investors in IPO. After a long time passed, the commission led by Khairul Hossain did not approve any new IPO. As a result, the first five months of 2020 were empty of IPOs.
However, the IPO market became active after Professor Shibli Rubaiyat-ul Islam joined BSEC as chairman at the end of May. The commission headed by him started issuing IPOs of one company after another. As a result, entrepreneurs got the opportunity to withdraw record amount of money in only seven months in 2020.
The IPO market will be crowded by the end of 2020. Stay strong throughout the year 2021. As a result, a record amount of money was withdrawn from the capital market through IPO for two consecutive years. However, that trend was not seen in 2022, which was on its way out. In September, October and November of this year, four companies raised money through IPOs, but only two companies had IPOs in the previous eight months.
JMI Hospital Requisite Manufacturing became the first company to raise money through IPO this year. The company withdraws Tk 74 crore 99 lakh 99 thousand through book building method. Out of this premium is Tk 39 crore 70 lakh 58 thousand. The company took IPO applications from February 27 to March 3.
After that, no more IPOs came in March and April. After a two-month hiatus, Meghna Insurance raised money from the stock market through an IPO in May. This company raised Tk 16 crore by selling shares at fixed price in IPO.
Then there was no IPO in the three months from July to August. After three months in September, two companies raised money from the stock market through IPO. Out of this, Chartered Life Insurance raised Tk 15 crore through fixed price method and Navana Pharma raised Tk 75 crore through book building method. By selling shares in the IPO through book building, Navana Pharma received a premium of Tk 4781 lakh 39 thousand.
Global Islami Bank sold shares in IPO in October. This bank has taken Tk 425 crores from investors by selling shares at fixed price method. This company raised the most amount through IPO this year. Global Islami Bank alone raised more than double the amount raised by the rest of the 5 IPO companies in the year.
Islami Commercial Insurance has raised money through all the last IPOs this year. The general insurance company raised Tk 20 crore 26 lakh 11 thousand by selling shares in IPO under fixed price method.
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim told as the reason for the decrease in withdrawal of money through IPO, although the withdrawal of money through IPO has decreased compared to 2020 and 2021, but it is more than the previous years. Fewer IPOs are coming this year compared to last year due to which company applications for IPOs are less this year.
Besides, the profit margin of manufacturing sector companies has decreased due to the Russia-Ukraine war. As a result, some companies could not fulfill the conditions of IPO. Again, there is some liquidity crisis in the stock market. Due to this, the number of IPOs has decreased. Several companies are in the process of IPO. If the liquidity in the market increases, the IPO of these companies will come – said the spokesperson of BSEC.
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