Small-cap companies dominated the initial public offering (IPO) market in the outgoing year 2018 that has seen a constantly bearish market, said an analyst.
The Dhaka Stock Exchange (DSE) data show 13 companies raised a total of Tk 5.46 billion by floating IPOs this year.
Fundraising by companies through IPOs has jumped 223 per cent year on year in 2018, after hitting a nine-year low in the previous year.
In 2017, six companies raised a total of Tk 1.69 billion through IPOs, according to the DSE data.
Meanwhile, the outlook appears to be bullish for the coming year 2019, as some companies, including Esquire Knit Composite and Runner Automobiles, 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.
The DSEX -- the prime index of DSE -- eroded more than 963 points or nearly 15.42 per cent between January 01 and December 23 this year.
"The performance of the primary market is relatively good, as the share prices of newly listed companies skyrocketed on their debut trading days, which encouraged investors to collect at least an IPO lot to book some short-term profit," said a leading broker.
Finding that there is no risk in the primary market, the investors showed more interest in it, he noted.
The newly listed companies follow two methods -- fixed price and book-building -- in issuing IPOs in the country's capital market.
Two companies that used book-building method were Bashundhra Paper Mills and Aman Cotton.
Eleven other companies that raised funds using fixed-price method were Queen South Textile, Advent Pharma, Intraco Refuelling, SK Trims & Industries, VFS Thread Dyeing, ML Dyeing, Silva Pharmaceuticals, Indo-Bangla Pharmaceuticals, Kattali Textile, SS Steel and Genex Infosys.
Most of the funds, raised through IPOs, were meant for business expansion, repayment of loans, and supporting working capital requirements.
In 2017, six companies raised a total capital amounting to Tk 1.69 billion, including premium, through IPOs.
The companies that used fixed price method 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).
Aamra Networks raised Tk 562.50 million using book-building method in 2017.
Fundraising through IPOs in 2011 was the highest -- Tk 16.78 billion -- since the stock market debacle in 2009-10.
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