Fundraising via IPOs hits record high in 9 years

Twenty-three companies raised Tk 1,653.86 crore through initial public offerings (IPOs) in 2021, hitting the highest level in nine years.

This is nearly double the Tk 985 crore raised through 8 IPOs in 2020 and close to the previous best of Tk 1,842 crore raised in 2012, according to the Bangladesh Securities and Exchange Commission’s (BSEC) data.

The maximum money to the tune of Tk 1,618 crore raised by 19 companies has gone to their growth and expansion at a time when the economy came to a halt due to the coronavirus pandemic, the data shows.

According to experts, if a company raises fresh capital, it reflects the fact that the economic activity will pick up soon. That’s the same case that happened in 2021.

“Companies from the manufacturing or services sector raised fresh capital. This is a healthy trend for the economy,” said an expert.

The bullish trend at the stock markets buoyed the investors’ interests in the IPOs too. The benchmark indices of the Dhaka Stock Exchange hit new highs during the year. The DSEX hit an all-time high of 7,367 on October 10, 2021.

Around Tk 550 crore was raised in 2019, Tk 655 crore in 2018, Tk 1,442 crore in 2017, Tk 950 crore in 2016, Tk675 crore in 2015, Tk 3,263 crore in 2014, Tk 910 crore in 2013, Tk 1,842 crore in 2012, Tk3,233 crore in 2011, Tk3,390 crore in 2010 and Tk 917 crore in 2009, according to the BSEC.

Union Bank led a Tk 428 crore mop-up through IPO during 2021 when the key index also leaped to new highs shrugging off Covid-19 concerns.

The bank was followed by NRBC Bank that raised Tk 120 crore, SBAC Bank Tk 100 crore, JMI Hospital Tk 75 crore, Lovello Ice Cream Tk 30 crore, eGeneration Tk 15 crore, Desh General Insurance Tk 16 crore, Sonali Life Insurance Tk 19 crore, Sena Kalyan Insurance Tk 16 crore, Acme Pesticides Tk 30 crore, Union Insurance Tk 19.36 crore, BD Thai Food and Beverage Tk 15 crore, Baraka Patenga Power Tk 225 crore, Lub-rref (Bangladesh) Tk 150 crore, Energypac Power Generation Tk 150 crore, Mir Akhter Hossain Ltd Tk 125 crore and Index Agro Tk 50 crore.

Apart from the companies, National Polymer got the BSEC’s nod to raise Tk 54.7 crore by issuing rights shares.

Besides, six small and medium enterprises or SMEs raised Tk 70.5 crore for the first time in 2021 after the SME platform was launched in 2019 to attract small businesses to the stock market.

Of the SMEs, Krishibid Feed raised Tk 22 crore, Mostafa Metal Industries Tk 11 crore, Master Agro Tk 10 crore, Oryza Agro Tk 10 crore, Mamun Agro Tk 10 crore and Nialco Alloys Tk 7.5 crore in 2021.

“Entrepreneurs in the SME sector need adequate financial and logistic support as well as proper nurturing to grow,” said BSEC Chairman Professor Shibli Rubayat-Ul-Islam recently at an event.

At another event, he said the regulator gets ready to approve an IPO within two weeks if all the documents required for the listing are filed.