13 of 15 IPOs approved in last 6 months of 2020

The initial public offerings (IPOs) of 13 companies out of 15 were finally approved in the second half of 2020.    

This year, the Bangladesh Securities and Exchange Commission (BSEC) approved the 15 companies to raise a total of Tk1,385.86 crore from the capital market. 

The BSEC chairman said the number of IPO approvals is not sufficient and more are needed. 

Though 17 companies received approval to raise Tk1,452.86 crore, one of them withdrew its IPO application, while the regulator cancelled the application of another company due to irregularities.

Additionally, two listed companies received approval to raise Tk77.75 crore by issuing right shares.

Although the regulatory body approves the IPO, the Dhaka Stock Exchange (DSE) finalises it after scheduling the subscription.

Considering this, the DSE said eight companies raised Tk985.87 crore through IPOs in 2020. Three firms raised Tk311 crore in premiums. 

In 2019, nine firms, including a corporate bond, raised Tk652 crore. 

This year, nine companies, including a bond, were listed on the DSE with paid-up capital of Tk6,002.71 crore. Last year, 10 companies, including a mutual fund, were listed.  

BSEC data shows 13 of the 15 approved companies received IPO approvals in the last six months of the year, which has never happened in the past.

In the first six months of 2020, just two companies received IPO approvals. IPO approval was closed for a while due to revisions to the Public Issue Rules.

After the expiration of the term of the commission headed by Professor M Khairul Hossain of the University of Dhaka, Professor Shibli Rubayat-Ul-Islam of the Department of Banking and Insurance of that university became the chairman in May this year. 

After taking over, Shibli focused on the speedy disposal of IPOs that had been pending for a long time and regaining investors' confidence.  

He said long-term industrial entrepreneurs need huge amounts of capital to create jobs in line with the growth of gross domestic product (GDP). 

"This is because in the long run, entrepreneurs will rush to banks for loans if they do not get capital," he said.  

"In the future, IPOs of good companies will be approved to provide long-term capital solutions to industrial entrepreneurs. This will reduce debt burdens on banks while the burden of default loans will not increase either," he explained. 

On 7 January, Walton Hi-Tech Industries Limited received bidding approval to set the cut-off price to issue shares in the book building method. The cut-off price of each share was set at Tk315 to raise Tk100 crore.

However, general investors got shares at Tk252 each, which was 20% less than the cut-off price. At present, the company's share price is Tk1,113.

Robi Axiata Limited was approved to raise Tk523.79 crore. After completing all procedures, the trading of its shares started on 24 December, and its share prices rose by 120% to Tk29.8 in just four days.

Energypac Power Generation Limited received bidding approval to set share prices on 6 August to raise Tk150 crore. The cut-off price was set at Tk35. 

Mir Akhter Hossain Limited and Lub-rref (Bangladesh) Limited got approvals to raise Tk125 crore and Tk150 crore, respectively. 

Moreover, Associated Oxygen was approved to raise Tk15 crore, Express Insurance Tk26.07 crore, Dominage Steel Building Systems Tk30 crore, Index Agro Industries Tk50 crore, Crystal Insurance Company Tk16 crore, Taufika Foods and Agro Industries Tk30 crore, eGeneration Tk15 crore, NRB Commercial Bank Tk120 crore, Desh General Insurance Company Tk16 crore, and Sonali Life Insurance Tk19 crore.

Delta Hospital Limited was approved to raise Tk50 crore. The cut-off price was set at Tk11. 

However, as the share price was not satisfactory, the company withdrew the IPO application on 10 June.

AFC Health Ltd received approvals to raise Tk17 crore but its IPO was cancelled due to irregularities.

Pragati Life Insurance Limited received the approval to raise Tk23.02 crore by issuing one right share against one general share at Tk15. 

Meanwhile, National Polymer Industries Limited received approval to raise Tk54.73 crore by issuing one right share against one general share.