No closed-end mutual fund in last 18 months
Mohammad Mufazzal | Sunday, 5 October 2014
The country's capital markets witnessed no flotation of closed-end mutual fund (MF) in last 18 months although 36 companies went public during the period, officials said.
The asset management companies (AMCs) said they failed to float any closed-end MF due to poor market condition and less interest of sponsors as well.
The officials of the Bangladesh Securities and Exchange Commission (BSEC) said the regulator approved the last IPO (initial public offering) proposal of ICB AMCL Sonali Bank Limited 1st MF on March 19, 2013.
"After the approval of ICB AMCL Sonali Bank Limited 1st MF, no closed-end MF went public," the BSEC official said.
Yawer Sayeed, the managing director of AIMS of Bangladesh, said under the prevailing situation the sponsors are not showing any significant interest to float MF.
"The sponsors of two MFs withdrew their funds as their proposal of converting their profits, which came from the investment of sponsor portion, into units was not considered," Mr. Sayeed said.
He said the regulator should conduct a study as to how the MF industry can be vibrant and attractive.
According to BSEC officials, presently 12 IPO proposals of MFs, including the open-end ones, are pending with the securities regulator.
As per securities rules, the minimum size of a closed-end MF will be Tk 500 million whereas the minimum size of an open-end MF will be Tk 100 million.
Before going for IPO, the AMCs are to collect 10 per cent of total size of a MF from the sponsors.
"Presently, banks and financial institutions are less interested to sponsor MFs due to their reduced exposure limit to the capital market," the BSEC official said.
He said, "The regulator is approving around two IPO proposals a month. But no IPO proposal of closed-end MF was approved since April, 2013."
The securities regulator, however, approved the IPO proposal of an open-end MF named CAPM Unit Fund in early 2014.
The BSEC official said in 2013 some AMCs were also not interested to go for public subscription of some MFs, whose IPO proposals were approved by the regulator due to fear of under subscription.
"As a result, the regulator earlier had to extend the timeframe of public subscription."
Recently, the securities regulator brought amendment to the rules of MFs.
According to the revised rules, AMCs will be able to sponsor floating MFs.