Fund raising from the capital market through initial public offerings declined by 34.33 per cent or Tk 448 crore in the just concluded fiscal year 2015-16 compared with that in the previous fiscal year.
According to a Dhaka Stock Exchange report, 11 companies raised Tk 858.30 crore through IPOs while 16 companies had collected Tk 1,306.97 crore from the market under the same process in the fiscal year 2014-15.
Experts and stakeholders attributed the fall in the entities’ fund collection from the capital market to a prolonged downward trend at the market.
An official of the Bangladesh Securities and Exchange Commission told New Age recently that opposition of a section of investors to allowing IPOs frequently to protect the secondary market from further sluggishness was the main reason that refrained the commission from allowing higher number of IPOs.
Enhancing the capital market’s contribution to the industrial development would not be possible unless the secondary market becomes vibrant and stable, experts said.
The DSE key index, which has been on a downward trend since the market crash of 2010-11, finished at 4,507.58 points on June 30, 2016, 75.52 points down from 4,583.10 points on June 30, 2015, as the market remained mostly volatile throughout the year due to investors’ concern about the law and order situation in the country.
The aggregate turnover at the bourse also declined to Tk 1,07,246.06 crore in FY16, Tk 5,105 crore down from Tk 1,12,351.93 crore in the fiscal year 2014-15.
Apart from the fragile law and order situation, banks’ capital market exposure adjustment-related fear that resulted in subsequent fall in share prices was another major reason for the market fall during the year.
As a result of investors’ shakiness regarding the market, the DSEX declined to one-year low at 4,171.40 points on May 2, 2016.
Waliul Islam, a former secretary, at a recent discussion said that concentration on the capital market should be increased as the sector was yet to be used properly in industrialisation.
Waliul, also an independent director of the DSE, said investors became depressed by investing in the capital market in 2010 when the market witnessed a bubble-burst.
‘Presently, institutional investors were also not that active following the incident. Companies with better fundamentals are not floating shares in the capital market for different reasons,’ he said.
Stockbrokers said making the secondary market vibrant was one of the key requirements for creating scope for new companies to raise fund.
The DSE report showed of the 11 companies raised fund from the capital market in FY16, five companies raised Tk 676.60 crore including Tk 514.60 crore in premium.
Of the five companies, ACME Laboratories raised the highest Tk 409.60 crore including Tk 359.60 crore in premium.
Regent Textile Mills, Doreen Power Generations and Systems, Simtex Industries and KDS Accessories were the other four companies.
IT Consultants, Vanguard AML BD Finance Mutual Fund, SMEL Lecture Equity Management Fund, Dragon Sweater and Spinning, Bangladesh National Insurance and Evince Textiles were the six companies and mutual funds which raised fund at par without any premium.
Source: New Age
