DSE looking for ways to list new cos amid dried-up IPO flow

The Dhaka bourse has been making frantic moves to bring new companies to the capital market as the flow of initial public offerings (IPOs) has dried up this year.
The aim is not only to help the market gain momentum but also to salvage the business of the exchange and market operators as daily transactions have kept falling for the floor price.
On Monday, the Dhaka Stock Exchange (DSE) sat with merchant bankers who work as issue managers.
"The market needs IPOs to ensure a desired trade volume to avert any possible long-term impact of the bearish market," said DSE acting managing director M. Shaifur Rahman Mazumdar.
The exchange can give a boost to the market in many ways, including by listing more companies, he said.
The DSE called the meeting in a situation when the country's capital market has had only one IPO until now this year. The IPO of Trust Islami Life Insurance was approved in January.
Last week, the DSE approved a draft of a memorandum of understanding (MoU) to be signed with the Bangladesh Garment Manufacturers and Exporters Association to tap into the potential of green RMG companies for listing.
Bangladesh Merchant Bankers' Association (BMBA) President Sayadur Rahman said the DSE felt that the business of the exchange and stock brokers would be affected unless more companies were listed.
Whenever new companies come in, investors show higher interest in putting money in them than in the already-listed companies, he said.
The securities regulator approved seven IPOs in 2022.
The companies, which went public in the year, were Midland Bank, Islami Commercial Insurance Company, Asiatic Laboratories, Chartered Life Insurance Company, Global Islami Bank, Navana Pharmaceuticals, and Meghna Insurance Company.
Monday's meeting chaired by DSE Chairman Dr. Hafiz Md. Hasan Babu discussed the obstacles to the listing of new companies.
Participants told the meeting that the issuers had become apathetic about listing because of the difficulty in meeting regulatory obligations.
They said the regulator usually sought financial documents of five years ahead of listing, but they often asked for documents of even earlier years during enquiries.
The BMBA president said a company would be reluctant to get listed unless they saw any advantage.
"New listings are possible only through ensuring incentives or through legal bindings. A combination of incentives and legal bindings would be a good solution."
The meeting participants also said merchant bankers would have to be strengthened by reducing tax burden.
Not-so-wide tax gap between listed and non-listed companies is another reason why new companies are not offloading shares in the market, they said.
Many issuers also do not show interest to go public under the book building method because they consider the valuation process improper.
The DSE informed the merchant bankers that some committees would be formed to work on the issues.
The premier bourse will also sit with the central bank and the National Board of Revenue to ease the process of listing.
The merchant banks agreed to bring more companies to the market as the premier bourse assured them of looking into the problems that they pointed out.
DSE Chairman Mr. Hasan Babu said the capital market had been passing a critical time. A group of people has been trying to keep the market volatile by spreading rumours ahead of the upcoming national election, he added.

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