BSEC writes solvent SoEs to offload shares

Bangladesh Securities and Exchange Commission (BSEC) has sent letters for the first time to 17 large state-owned enterprises (SoEs) to offload their shares.

The share offload of state-owned companies in the capital market has been a long-discussed issue since 2010. In Wednesday’s letters, the securities market regulator urged the companies to issue shares or bonds to raise capital.

Nine of these companies are in the power and energy sector, while others include engineering and travel.

BSEC spokesperson Mohammad Rezaul Karim told the Business Post on Thursday that separate letters were sent to 17 state-owned companies whose financial condition is good.

The companies are – Bakhrabad Gas Distribution Company, LP Gas Limited, Gas Transmission Company Limited, Jalalabad Gas Transmission and Distribution System, Sylhet Gas Fields, Bangladesh Gas Fields Company, Rupantarita Prakritik Gas Company, North-West Power Generation, Electricity Generation Company, Progoti Industries, Karnaphuli Paper Mills, Bangladesh Insulator and Sanitaryware Factory, Hotels International, Biman Bangladesh Airlines, Bangladesh Telecommunications Company, Bangladesh Cable Shilpa, and Essential Drugs Company Limited.

Of the total, only two SoEs are loss making, industry people said.

In its letter, BSEC said there are massive opportunities to expand business by raising capital in various ways, including equity shares, bonds etc through listing on the capital market. It will have the participation of the general people of the country.

The regulator said that offloading shares would benefit the companies and the general people. Stock market stakeholders said the news encouraged investors to pour money into those companies.

“It is assumed that the government will revalue the prices of shares and offload their stakes at set prices and offload those in the secondary market instead of Initial Public Offering (IPO) offerings through a direct listing,” said Shakil Rizvi, a director of DSE.

In January 2010, the government selected 26 state-run companies and instructed them to offload shares within the next six months, but nobody got listed.

Currently, 18 state-owned companies are listed on Dhaka Stock Exchange (DSE). They are – Titas Gas, Usmania Glass, Atlas Bangladesh, Eastern Cables, National Tubes, Renwick Jajneswar, Dhaka Electric Supply Company (DESCO), Eastern Lubricants, Jamuna Oil, Meghna Petroleum, Padma Oil, Power Grid, Bangladesh Shipping Corporation, Bangladesh Submarine Cable, Shyampur Sugar Mills, Zeal Bangla Sugar Mills and Rupali Bank Limited.

In February last year, Finance Minister AHM Mustafa Kamal announced that seven state-owned companies in the power and energy sector would soon enter the capital market to shore up the wobbly share market.

The successive governments over the decades have been trying to offload shares of SoEs. Ironically, respective boards of the enterprises concerned keep showing their indifference to the repeated calls from the governments, particularly from the finance ministry. Prior to their listings, SoEs have to audit their financial statements and determine asset values. The SoEs making profits for the last three consequtive years are considered for share offloading, a senior fionance official said.

Usually, the state-owned Investment Corporation of Bangladesh acts as an issue manager for offloading shares of SoEs.