Fund raising thru IPOs rises by 38.78pc in FY18

FT ONLINE

Fund raising by companies through issuing initial public offering increased by 38.78 per cent in the financial year of 2017-18 compared with that in the previous fiscal year.

Eleven companies including two mutual funds raised Tk 541.25 crore in FY18, while nine companies including three mutual funds had raised Tk 390 crore in the previous fiscal year.

In FY17, no companies had raised fund under the book building method of IPO, while three companies raised Tk 336.25 crore under the method in FY18.

Companies follow two methods — fixed price and book building — in issuing IPO in the country’s capital market.

The three companies that used the book building method in FY18 are: Aamra Networks (Tk 56.25 crore), Bashundhra Paper Mills (Tk 200 crore) and Aman Cotton Fibrous (Tk 80 crore).

The other companies — Oimex Electrode (Tk 15 crore), Nahee Aluminum Composit Pane (Tk 15 crore), SK Trims & Industries (Tk 30 crore), Advent Pharmaceuticals (Tk 20 crore), Intraco Refueling Systems (Tk 20 crore) and Queen South Textile Mills (Tk 15 crore) — raised fund under the fixed price method.

Of the two mutual funds, ICB AMCL First Agrani Bank Mutual Fund raised Tk 50 crore while CAPM IBBL Islamic Mutual Fund pooled Tk 30 crore in FY18 under the fixed price method.

The primary market remained vibrant in FY18 with the IPOs of a number of companies being oversubscribed.

For example, the IPO of Queen South Textiles was oversubscribed by 43 times, Oimex Electrode 41 times, Nahee Aluminum 37 times and Advent Pharma 35 times.

The newly listed companies also got huge response from investors amid their (investors) abnormal hype surrounding any newly listed company.

The share prices of Oimex Electrode shot up by 1,047 per cent on its debut on November 6 last year.

The shares of Oimex, which were issued at Tk 10 each under the fixed price IPO method, closed at Tk 114.20 each, increasing by Tk 104 on the day due mainly to investors’ buying spree.

The share prices of Aamra Network, which were issued at Tk 39 each, increased by 258.97 per cent to Tk 138.40 on its debut on October 2 last year and subsequently rose to Tk 144.5 in the fourth trading session of the scrip at the DSE.

The share prices of Nahee Aluminum Composite Panel Ltd on its debut on December 24 last year shot up by 812 per cent when the market was sluggish.

During the first half of FY18, the market witnessed an upward trend, hitting record highs several times that encouraged more companies to float shares in the capital market, officials of the Bangladesh Securities and Exchange Commission said.

Fund raising through IPO was sluggish in FY17 due mainly to the stricter public issue rules that were amended in December 2015.

Market operators said as the market remained stable in most the time of the financial year (FY18) and the shares of debutant companies got more attention from investors, more companies became encouraged to float their shares.

If the BSEC addresses the problem of delay in giving approval to IPO and ease the process, fund raising from the capital market would definitely rise, they said.