6 get listed in DSE, lowest in five years
Only six new companies got listed on the Dhaka Stock Exchange (DSE) this year, which was the lowest since 2017.
Fourteen companies got listed in the capital market last year – 57% higher than the current year.
The amount of capital raised from the stock market fell by 49% from around Tk1,233 crore in 2021 to around Tk626 crore in 2022.
Outbreak of the Russia-Ukraine war just when the economy was recovering from Covid-19 pandemic's effect resulted in a bearish share market. Due to reduced demand, market intermediaries and investors advised the authorities to reduce approving IPOs in order to avoid an increase in the supply of shares amid a downward trend of the capital market.
In this situation, the Bangladesh Securities and Exchange Commission (BSEC) decreased approving new IPOs. Besides, due to economic stagnation, entrepreneurs were reluctant to raise capital from the capital market for business expansion.
In July this year, the BSEC set a floor price to prevent the fall of share prices. The BSEC has also not approved any new IPOs in nearly three months since September this year.
In 2022, Navana Pharmaceutical and JMI Hospital Requisite Manufacturing each raised Tk 75 crore, Meghna Insurance Company raised Tk15 crores, Chartered Life Insurance Tk15 crore, Global Islami Bank Ltd raised Tk425 crore, and Islami Commercial Insurance Co Ltd Tk20.26 crore from the capital market.
Among the 14 companies that got listed in the stock exchanges in 2021, seven were from the fuel and power, food, pharmaceuticals and chemicals, and information technology sectors, which raised Tk515 crore, while banks and insurance companies raised Tk718.36 crore.
Meanwhile, two perpetual bonds and a golden jubilee fund got listed at the DSE this year.
"When the market remains bearish or sluggish, IPO flow tends to slow down globally and in the Bangladesh capital market less IPO is believed to be a help to the secondary market and indices," said M Shaifur Rahman Mazumdar, the acting managing director of the DSE.
"Bangladesh capital market is suffering from a chronic problem – reluctance of successful companies to go public while most in the IPO pipelines are not lucrative to the serious long term investors," he said.
"Also, a diversified range of investors alongside a diversified basket of capital market products needs to be created here. The investors' increased appetite for stocks in the secondary market, IPO flow should rise in future," he added.
Md Sayadur Rahman, president of Bangladesh Merchant Bankers Association told TBS, "Entrepreneurs are not interested in raising capital as the situation in the stock market is not good. Besides, the commission has approved fewer IPOs to avoid increasing the supply of shares amid a reduced demand."
He also said, "Investors are interested in the shares of good companies, but these companies are not coming to the market.
Meanwhile, investors are not interested in the shares of the companies that are joining the capital market. So, initiatives should be taken to increase the number of good companies in the stock market."
According to stockanalysis.com, the US market saw an all-time high 1,035 IPOs in the bull market of 2021 following 480 in 2020, while the average number of IPOs in the last decade had been 200-250.
In 2022, the Wall Street had only 175 IPOs to date, which was the lowest since 2016.