Private companies have offloaded primary shares worth Tk 16.12 billion in the just concluded fiscal year, the highest amount in more than a decade, amid virus-induced sluggish economic activities.
With the latest one of Baraka Patenga Power, the country's capital market witnessed 16 initial public offerings (IPOs) in the fiscal year (FY) 2020-2021, boosting the market capitalisation significantly and increasing the depth of the market.
Battered by the Covid-19 pandemic, insiders said, the companies raised such huge amount of funds on expectations that it might help stimulate their business strength in the post-pandemic period.
Most part of the funds is meant for business expansion, repayment of loans and meeting the working capital requirements. The market also has seen the entry of the largest ever IPO - Robi Axiata-- during the outgoing fiscal year.
However, fund raising through IPOs hit an 11-year low in the FY 2019-20 due to fierce criticisms over poor IPO approval by the then securities commission and market closure for 66 days (March 26 to May 30) due to coronavirus outbreak.
Only two companies -- Ring Shine Textiles and ADN Telecom and one bond Ashuganj Power Station Company--- raised an aggregate amount of Tk 3.07 billion in the FY 2019-20, according to the data available with the Dhaka Stock Exchange (DSE).
The companies followed two methods - fixed price and book-building - in issuing the IPOs.
Six companies used the book-building method - Walton Hi-Tech Industries (Tk 1.0 billion), Energypac Power Generation (Tk 1.50 billion), Mir Akther Hossain (Tk 1.25 billion), Lub-rref (Bangladesh) (Tk 1.50 billion), Index Agro Industries (Tk 500 million) and Baraka Patenga Power (Tk 2.25 billion).
Ten other companies raised funds using fixed-price method - Robi Axiata (Tk 5.23 billion), Dominage Steel Building Systems (Tk 300 million), Express Insurance (Tk 260.79 million), Associated Oxygen (Tk 150 million), Crystal Insurance (Tk 160 million), Desh General Insurance (Tk 160 million), eGeneration (Tk 150 million), Taufika Foods and Agro Industries (Tk 300 million), NRB Commercial Bank (Tk 1.20 billion) and Sonali Life Insurance (Tk 190 million).
Market operators said IPO approval process got faster after the new commission led by Prof. Shibli Rubayat Ul Islam joined as the BSEC chairman in May last year and later three commissioners were appointed following the completion of tenure of the previous chairman and commissioners.
"We want to make the market vibrant through bringing new issues with good fundamentals," Rezaul Karim, spokesperson at the Bangladesh Securities and Exchange Commission (BSEC) said recently.
He noted that the new issues will strengthen the market as well as the economy.
Dr AB Mirza Azizul Islam, a former adviser to the caretaker government, said making the secondary market vibrant is one of the key factors needed to create scopes for the new companies to raise funds through IPOs.
Mr Islam, also a former chairman of BSEC, said the companies having good fundamentals and reputation should be allowed to be listed to deepen the market.
He also stressed the need for bringing state-owned enterprises to further strengthen the market and make it efficient.
Some market experts said the regulator to be cautious about the unscrupulous companies that tend to take advantage of relaxed IPO rules and regulations. They suggested doing proper valuation and scrutiny of the IPO proposals before approval.
The country's capital market also posted the highest return in a decade in the outgoing fiscal year despite ongoing pandemic.
Between July 1 and June 30, DSEX, the prime index of the DSE, rose 2,161 points or 54 per cent to settle at 6,150 on June 30, the highest level in 41-month.
With the inclusion of the new issues, the market capitalisation of the prime bourse also soared to an all-time high at Tk 5,142 billion on June 30.
Through IPOs, companies raised Tk 5.71 billion in the FY2018-19, Tk 5.41 billion in FY2017-18, Tk 3.90 billion in FY2016-17, Tk 8.58 billion in F2015-16, Tk 13.07 billion in FY2014-15, Tk 6.52 billion in FY2013-14, Tk 7.08 billion in FY2012-13, Tk 1.47 billion FY2011-12, Tk 11.22 billion in FY2010-11 and Tk 13.98 billion in FY2009-10, according to DSE data.
