Fundraising through initial public offerings (IPOs) remained sluggish as only seven companies raised Tk 4.95 billion, including premium, through IPOs in January-September period of this year.
The nine-month figure is down 1.20 per cent year on year, according to the Dhaka Stock Exchange (DSE) data.
During January-September of 2018, as many as 11 companies, mostly small ones, raised a combined Tk 5.01 billion through IPOs, the DSE data show.
This year, two companies used book-building method while five other companies fixed-price method to launch IPOs in the capital market.
The two companies that used book-building method are Square Knit Composite (Tk 1500 million) and Runner Automobiles (Tk 1000 million).
Five other companies are New Line Clothings (Tk 300 million), Silco Pharmaceuticals (Tk 300 million), Coppertech Industries (Tk 200 million), Sea Pearl Beach Resorts (Tk 150 million) and Ring Shine Textiles (Tk 1500 million).
Most of the funds, raised through IPOs, were meant for business expansion, repayment of loans and working capital requirements.
Market insiders attributed the sluggish IPO trend to the revision of the public issue rules, the regulator's conservative policy in approving IPOs and the volatile equity market.
Although investors are showing interest in the primary market, the regulator goes slow in approving IPOs considering the market situation, said an analyst.
The DSEX -- the benchmark index of DSE -- eroded more than 438 points or 8.13 per cent between January 01 and September 30 this year.
Some issue managers told the FE that weak market trend and further revision of Public Issue Rules have weighed on the IPO launching process.
The newly revised Public Issue Rules compelled many issuer companies to review their IPO proposals, a major reason for slow trend of IPOs, said a merchant banker.
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 new companies to raise funds through IPOs.
Mr Islam, also former chairman of the Bangladesh Securities and Exchange Commission (BSEC), said companies having good fundamentals and reputation should be allowed to be listed on the market to increase its depth.
He also stressed the need to bring state-owned enterprises to the market in order to restore the investor confidence.
A BSEC official said companies now need more time to fulfill the requirements as per the amended Public Issue Rules and they started the IPO procedure anew to get the securities regulator's approval.
On July 16 this year, the stock market regulator approved the revised Public Issue Rules, raising the general investors' IPO quota (excluding non-resident Bangladeshis) to 50 per cent from 40 per cent under the fixed-price IPO method.
Under the book building method, eligible investors' quota has also been brought down to 50 per cent from 60 per cent and the general investors' quota (excluding NRBs) raised to 40 per cent from 30 per cent.
"This will increase the general investors' participation in upcoming IPOs," said a leading broker.
The IPO market has been sluggish since the beginning of 2010 when the market boomed and then doomed as the regulator has tried to limit new issues.
Fundraising through IPOs in 2011 was the highest -- Tk 16.78 billion -- since the stock market debacle in 2009-10.
