Raising capital through IPO drops 57% in FY22

Infographic: TBS

Raising capital from the stock market through initial public offerings (IPOs) fell by 57% in FY22 compared to the previous fiscal, according to the Dhaka Stock Exchange (DSE).

Meanwhile, collecting funds by issuing bonds increased significantly in the last fiscal as the stock market regulator approved a large number of bonds to mobilise the bond market and reduce the capital market's dependence on equity, said sources at DSE.

Sources at the Bangladesh Securities and Exchange Commission (BSEC) said the stakeholders informally requested the securities regulator to lower the number of new IPOs as the market was on a downtrend last year. The supply was reduced due to low demand for shares in the market at that time.

Eight companies got listed on the stock market in FY22 and raised Tk699.36 crore through IPOs, while 16 newly listed companies raised Tk1,610.6 crore through IPOs in FY21.

According to the DSE, the Union Bank collected the highest amount of capital – Tk428 crore – in FY22, and the South Bangla Agriculture and Commerce Bank collected the second highest amount – Tk100 crore.

Besides, Sena Kalyan Insurance, Meghna Insurance, Union Insurance, ACME Pesticides, Thai Food and Beverage and JMI Hospital Requisite Manufacturing also raised capital through IPOs in the last fiscal.

Meanwhile, six companies collected Tk2,900 crore in funds by issuing bonds in FY22.

Moreover, Beximco Green-Sukuk Al Istisna – the first-ever asset-backed security by a private sector entity in Bangladesh – collected Tk3,000 crore, in which Tk2,575 crore was collected through private placement of bonds, and Tk425 crore was collected by public offering in the last fiscal.

BSEC Executive Director Mohammad Rezaul Karim told The Business Standard, "The commission approved some new IPOs at the end of the last fiscal. The subscription process for them is either going on or almost finished. So, the amount of capital raised from the capital market will increase further."

Regarding the higher number of IPOs in FY21, he said, "A large number of IPO applications remained pending at the commission for a long time. The number of new IPOs in FY21 increased as many of those IPO applications were approved at a fast pace."