Why this great IPO drought in Bangladesh's capital market

Infographics: TBS

Despite clear directives from Chief Adviser Muhammad Yunus to revive the capital market by listing government and multinational firms, no visible progress has been made in months. The IPO market remains frozen – the longest dry spell in recent memory.

In May this year, Chief Adviser Muhammad Yunus convened a high-level meeting with regulators and business leaders. His message was clear: offload government shares in multinational companies (MNCs), encourage large private firms to go public, and promote equity and bond financing instead of relying on bank loans.

Nearly six months later, nothing has moved.

MNCs have shown little interest in initial public offerings (IPOs). As one chief executive of a major multinational told The Business Standard, "The decision to raise funds through the stock market comes from the board. Frankly, there's no such plan now; we simply don't see the need."

The government's parallel effort to bring 18 state-owned enterprises (SOEs) to the bourse has also stalled, with no tangible progress as the country heads toward the February general election.

The last company to go public was Techno Drugs, approved by the Bangladesh Securities and Exchange Commission (BSEC) on 7 March 2024 to raise Tk100 crore through an IPO. Its shares began trading four months later. Since then, silence – no new IPO approvals in more than a year and a half.

Following the fall of the Sheikh Hasina government, the new BSEC under Chairman Khondoker Rashed Maqsood cancelled nearly a dozen pending IPOs, calling it part of a reform drive. Market insiders say that decision effectively emptied the IPO pipeline.

Such a prolonged standstill is unprecedented, according to market stakeholders.

During the 2007–08 caretaker government's two-year tenure, 26 companies – both public and private – were listed. Over the past 15 years, an average of 10 firms went public annually. In contrast, under the current interim government, not a single new listing has materialised.

Government's listing push meets resistance

Since the interim government took office in August 2024, Special Assistant to the Chief Adviser Anisuzzaman Chowdhury has been leading the capital market reform initiative. Asked about progress – including hiring foreign consultants and the lack of new listings – he said only, "Work is underway on these matters."

The Ministry of Industries and the Bangladesh Chemical Industries Corporation (BCIC) hold stakes in several state-owned and multinational enterprises. BCIC Chairman Md Fazlur Rahman said efforts are ongoing to bring these firms to the market. "We've held joint and separate meetings with the companies. Some are responding positively, others are less enthusiastic. We hope they will comply with the government's directive," he told TBS.

An official from a public power company said it is "more or less prepared" for listing but awaits final approval from the finance ministry.

In August, Industries Secretary Obaidur Rahman presided over the first "ice-breaking" meeting with MNCs, informing them of the government's plan to offload at least 5% of its own shares and 5% of foreign partners' shares in all joint ventures.

Meanwhile, the Dhaka Stock Exchange (DSE) has been holding talks with trade bodies to attract new listings – including meetings with BGMEA, DCCI, and the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA). Plans are also underway to approach the Bangladesh Association of Pharmaceutical Industries (BAPI).

So far, however, plans have not translated into results.

IPO drought: Why companies are staying away

Investors and analysts have long called for new listings of strong-performing firms to reinvigorate the market. But several structural bottlenecks are holding them back.

In mid-September, Rupali Chowdhury, president of the Bangladesh Association of Publicly Listed Companies, said IPOs in Bangladesh take over 24 months, compared to 6-8 months in comparable markets. "After listing, compliance requirements are numerous. Large entrepreneurs who can easily access bank loans have little incentive to enter the stock market," she noted.

Merchant bankers said the BSEC's decision to cancel pending IPOs and delay amendments to the Public Issue Rules has paralysed the market. "The regulator talks about reform and transparency, but the market feels frozen. No one knows what the new rules will look like, and no one wants to be the first to test them," said a senior banker.

Others blamed a lack of engagement between the regulator and stakeholders. "Meetings are nearly impossible. We hesitate to submit new IPO applications for fear they'll be rejected," one merchant bank official told TBS.

Uncertainty over political stability has also dampened confidence. Many entrepreneurs are focused on survival, not expansion. Still, insiders say new IPOs could emerge once the Public Issue Rules are finalised.

What BSEC says

Regarding the lack of IPO approvals, BSEC spokesperson Abul Kalam told TBS, "Amendments are being made to the Public Issue Rules to facilitate capital raising through IPOs."

"Under the existing Public Issue Rules, entrepreneurs could apply to raise capital, but the commission has not received any IPO applications, which is why no approval has been granted," he added.

He also said that discussions have been held with the relevant ministries and authorities on offloading government shares in state-owned and multinational companies operating in Bangladesh. He expressed optimism that these companies will be listed in the future.

Dhaka Stock Exchange (DSE) Chairman Mominul Islam also said similar things. He recently told TBS that efforts are underway to list some state-owned and well-performing local companies.

He added that the issues in the Public Issue Rules are being addressed, and a "green channel" has been introduced to enable faster listing of quality companies.

After Khondoker Rashed Maqsood became BSEC chairman, an inquiry committee was formed to probe 15 years of irregularities and a task force to drive market reforms. 

Based on the task force's recommendations, amendments to the Public Issue Rules were drafted to facilitate IPOs, but they have not yet been published for stakeholder feedback.

Economy rebounds, yet capital market stays cold

Capital markets are often described as mirrors of the economy – they reflect confidence, growth, and risk appetite. If that's true, Bangladesh's mirror is clouded.

The World Bank this month forecast Bangladesh's GDP growth to rise to 4.8% in FY26, up from 4% a year earlier, before accelerating to 6.3% in FY27 – a clear signal that the economy is regaining its pulse after the political upheaval of August 2024. 

But the capital market, which should have been among the first to echo that optimism, remains eerily quiet.

The macro numbers suggest recovery, but the absence of new listings tells another story: one of hesitation, uncertainty, and a lingering distrust of the system meant to channel private ambition into public growth.

'Without fresh listings, the market will dry up'

Former BSEC chairman Faruq Ahmad Siddiqi said, "If capital raising does not resume, the stock market will gradually dry up. With no new supply of shares, the market is failing to move forward and continues to circle around its previous state."

He said that during his tenure, listing a few state-owned companies was possible due to his strong ties with multiple ministries. "Without close ministry connections, getting a government company listed is extremely difficult," he noted.

On the lack of IPOs in the past year, he stressed the need for an investment-friendly environment: "The current uncertainty cannot be resolved without an elected government. Once law and order are restored and conditions improve, entrepreneurs will raise capital to expand their businesses."

Former secretary Faruq Ahmad served as BSEC chairman from 2006 to March 2009.

26 companies listed in 2007–2008

During the Fakhruddin Ahmed-led caretaker government, several state-owned companies – Jamuna Oil, Meghna Petroleum, and Titas Gas – were listed, alongside private firms like BRAC Bank, Shahjalal Islami Bank, Premier Bank, Trust Bank, and ACI Formulations. Seven insurance companies, six non-bank financial institutions, and four manufacturing firms, including ACI Formulations, also joined the market.

In 2009, Grameenphone was listed, following initiatives from the caretaker government, and it remains the largest company by market capitalisation.

Currently, 19 state-owned companies are listed, with the most recent being Bangladesh Submarine Cable Company in 2012; no new government-owned firms have entered the market since.

Nearly 200 companies got listed during AL's 15 years

The Awami League came to power on 29 December 2008 and, over more than 15 years – including three full terms and a fourth government formed in January 2024 before its fall due to a student movement – oversaw the listing of nearly 200 companies on the stock market. Some listings involved legal violations, preferential treatment, and manipulations, but no corrective action was taken.