Forty-nine listed companies raised funds through initial public offering (IPO) in the last five years, of which the highest number of ten IPOs were from the textile sector and the total volume of funds raised by these companies amounted to Tk564 crore.
Overall, the number of listed textile companies in the capital market now is higher than that of any other sector. Currently, the textile sector has 58 listed companies, which is about 17% of the total number of companies listed with the capital market.
According to the Dhaka Stock Exchange (DSE), private sector entrepreneurs and businesses raised Tk3,486.48 crore in capital through IPO in the last five years. Of which, Tk1,389 crore went to the manufacturing sector, Tk1,337 crore to the service sector, and Tk760 crore was raised by companies in the financial sector.
Three banks raised Tk648 crore in capital during this period.
Basically, banks and insurance companies raised capital by issuing shares in the stock market under the direction of the central bank, which they would invest in government securities and bonds or in the capital market. On the other hand, entrepreneurs in the manufacturing and service sectors raised funds to expand their businesses.
Of the companies that got listed with the capital market over the last five years, seven are in a good position in terms of business and profit, three are in crisis which is why their shareholders are not getting dividends regularly.
Shepherd Industries, which entered the capital market in 2017 through raising a capital of Tk20 crore, made losses in the last two financial years.
In the same year, Nurani Dyeing and Sweater Ltd raised Tk43 crore in capital but the factory of the company is now closed as its owner has fled abroad with the IPO money.
The factory of Ring Shine Textile – a 100% export-oriented textile company— is also closed. The company was listed with the capital market in 2019 and raised Tk150 crore by issuing shares.
People concerned said large companies in the textile sector are not coming to the capital market. The ones getting listed are basically small ones who want to raise funds from the capital market to expand their business.
Arif Khan, vice chairman of Shanta Asset Management and former commissioner of the Bangladesh Securities and Exchange Commission (BSEC) told The Business Standard, "Garments or textile is the largest industry in the country, which is also the key export earning sector. And it is natural that entrepreneurs will show interest in the business that is the largest. They are coming to the capital market to meet their needs for funds. But sadly, big and good textile companies are not coming to the capital market yet. "
During the 2017-2021 period, various industries in the manufacturing sector raised Tk1,389 crore from the capital market, of which Tk584 crore went to the textile sub-sector.
Of the 10 companies in this group, Ring Shine Textile, and Esquire Knit Composite Ltd raised the highest volume of capital – Tk150 crore each.
The second highest capital of Tk450 crore was raised by nine companies in the engineering sub-sector. Runner Automobiles, and Walton Hi-Tech Industries raised Tk100 crore each while Mir Akhter Hossain Ltd raised the highest Tk125 crore.
In the pharmaceutical and chemical sub-sector, five companies got listed raising capital in the last five years.
Two companies in the food and allied, and paper industries of the manufacturing sector have raised capital by releasing shares.
Two companies in the food and allied sub-sector –Taufika Foods and Lovello Ice-cream, and BD Thai Food and Beverage – raised a total capital of Tk45 crore during the said period, while one company from the paper sub-sector – Bashundhara Paper Mills – raised Tk200 crore.
Majedul Islam, general manager and company secretary at Bashundhara Paper Mills, told TBS, "The capital was raised from the capital market for business expansion and it has been invested so that the income and profit of the company increase."
Arif Khan, former commissioner of the BSEC, said "Although there are many good and big companies in the manufacturing sector, they are not interested in IPO. We should try to convince them to come to the capital market."
The government has given a 10% tax differential in the case of listed and non-listed companies, and yet entrepreneurs feel it inconvenient, he mentioned, adding more facilities need to be offered if necessary to make them feel interested.
Services and miscellaneous
In the last five years, entrepreneurs in the fuel and power, IT, telecom, hotel and tourism, and miscellaneous industries raised Tk1,337 crore from the capital market to expand their businesses.
Five companies in the fuel and power sub-sector of the services sector raised the maximum capital of Tk570 crore. Of which, Baraka Patenga Power raised Tk225 crore, while Energypac Power Generation, and Lub-rref (Bangladesh) Ltd raised Tk150 crore each.
Robi Axiata, a multinational company in the telecom industry, raised the second highest capital of Tk523 crore in the services sector.
Four companies in the IT industry raised Tk148.25 crore.
Sea Pearl Beach Resort and Spa from the travel and tourism sub-sector raised Tk15 crore.
Index Agro Industries Ltd, and SK Trims and Industries raised Tk50 crore and Tk30 crore, respectively, in the miscellaneous category.
Seven insurance companies and three banks raised capital by issuing shares in the capital market in the 2017-2021 period.
The insurance companies collected Tk112.44 crore while the banks raised Tk648 crore.
Union Bank — a fourth generation bank in the country had raised Tk428 crore by issuing 42.80 crore general shares for SME and project financing, buying government securities, and investment in the stock market.
South Bangla Agricultural and Commerce Bank raised Tk100 crore by issuing 10 crore shares for buying government securities.
NRB Commercial Bank raised Tk120 crore, issuing 12 crore general shares for buying government securities, and investing in the secondary market.
Comparison with peer countries
According to the latest data, 1,951 companies got listed on the National Stock Exchange of India as of 2021, while the number is 944 on the Bursa Malaysia, 716 on the Singapore Exchange, and 725 on the Stock Exchange of Thailand. But, the number of companies listed on the DSE is merely 345.
DSE's data show that in India, Malaysia, Singapore, and Thailand's stock market average listing was 65, 21, 12, and 28, respectively, in the last five years, while it was only nine in Bangladesh.
Merchant banks manage IPOs to bring companies into the capital market.
Asked why many companies in the country do not want to enter the capital market despite the fact that it is a source of long-term financing, Sayedur Rahman, president of the Bangladesh Merchant Bankers Association (BMBA), told TBS, "Entrepreneurs are getting loans from banks very easily. Many banks resort to lending to big entrepreneurs and they also find it difficult to raise capital from the capital market following different processes. On the other hand, many entrepreneurs do not feel interested as they fear transparency."
He also stressed the need for incentives, especially waiver on corporate tax, to increase large companies' listing with the capital market. Especially, corporates will have to give more discounts. The current tax breaks are not enough, he added.
Midway News Team
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