Sonali Investment gets back IPO quota facility

The Bangladesh Securities and Exchange Commission (BSEC) has reinstated the initial public offering (IPO) quota facilities for Sonali Investment Ltd after the company satisfied the regulator's licensing conditions.

Seeking anonymity, BSEC officials confirmed The Business Standard about the development.

According to the BSEC conditions, each merchant bank must submit at least one IPO proposal to the BSEC every two years and form five new portfolios annually.

In October 2021, the BSEC suspended Sonali's quota facilities due to the company's failure to meet those requirements.

In October 2021, the BSEC identified 15 inactive merchant banks out of a total of 65 and decided to withhold quota facilities in the primary market until they met the necessary conditions.

Merchant banks and asset management companies are entitled to quota facilities for initial public offerings (IPOs) and qualified investor offers (QIOs).

Industry insiders report that only a dozen of investment banks are sincere about the requirements such as issue and portfolio management and underwriting, as the majority only manage portfolios.

Some merchant banks are unable to file new IPOs with the commission within the stipulated time due to a lack of qualified staff, according to insiders. It is also noted that some merchant banks do not play an active role as market participants, leading issuer companies to enter into agreements with well-known managers regarding IPO listing.