IPOs surge 194pc in nine months of 2018 - Share market analysis of dhaka stock exchange, Bangladesh

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11 October, 2018 10:03 AM Source: The Financial Express Bangladesh

Fund raising by companies through initial public offerings (IPOs) surged by 194 per cent in the nine months of this year compared to the same period of the previous year.

During January-September 2018, 11 companies raised a total of Tk 5.01 billion through their respective IPOs, according to statistics from the Dhaka Stock Exchange (DSE).

Moreover, the outlook appears to be bullish for the remaining part of the year as some companies, including Runner Automobiles and Esquire Knit Composite, are expected to launch their initial share-sale offers in the coming months.

Market insiders attributed the revival of the IPO market to poor performance of the secondary market coupled with proactive regulatory environment.

DSEX, the prime index of the DSE, eroded more than 876 points or 14 per cent in the nine-month period of 2018.

"The performance of the primary market is relatively good as newly-listed companies' share prices soared manifold on their debut trading days, which encouraged investors to get at least one IPO lot to book short-term profit," said a leading broker.

He noted that as there is no risk in the primary market, the investors showed more interest in it.

The companies follow two methods - fixed price and book building - in issuing IPOs in the country's capital market.

The two companies that used the book building method during the period under review were Bashundhra Paper Mills and Aman Cotton Fibrous.

Nine other companies that raised fund using the fixed price method were Queen South Textile, Advent Pharma, Intraco Refueling Station, SK Trims & Industries, VFS Thread Dyeing, M. L. Dyeing, Silva Pharmaceuticals, Indo-Bangla Pharmaceuticals and Kattali Textile.

Most of the funds that have been raised during the period under review were for business expansion, repayment of loans and to support working capital requirements.

During the January-September period of 2017, six companies raised an aggregate amount of Tk 1.70 billion through IPOs. Of them, five companies used the fixed price method and one used the book-building method.

The companies were Shepherd Industries (Tk 200 million), Nurani Dyeing (Tk 430 million), BBS Cables (Tk 200 million), Oimex Electrode (Tk 150 million) and Nahee Alumium Composite Panel (Tk 150 million) under the fixed price method. Aamra Networks raised Tk 562.50 million using the book-building method.


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