Surge in textile IPOs in capital mkt in 3 yrs

Sixteen textile companies raised more than Tk 12.15 billion from the capital market in three years, ending in February, 2015.
The listed textile companies are likely to be the majority, in terms of their number, in the capital market soon if the companies awaiting the regulatory approval are listed.
They also hailed the textile companies' move to raise funds from the capital market as they need it to make their business alive in the long run.   
Presently, 314 companies are listed on stock exchanges under 18 categories such as banks, insurance and textiles.
Among the sectors, insurance has 46 companies whereas the textile sector has 39 companies, securing the second majority position.
At least one IPO of textile companies is being approved by the Bangladesh Securities and Exchange Commission (BSEC) in every two months.
 The officials of the securities regulator have said some IPOs of textile companies are in the pipeline for regulatory approval.
"Textile sector will top other sectors in near future if the pending IPOs are approved subject to fulfilment of regulatory requirement," a BSEC official said.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said there was a complaint against the textile companies that they were reluctant to go public.
"It's a good sign that the companies have started going public," Mr Mansur said
He said the securities regulator should remain cautious in allowing IPO proposals so that the companies having poor fundamentals do not get the scope of raising funds.
"I think, the companies in the garment sector are not interested to go public for fear of accountability. Their capital requirement is also not very high," Mr Mansur added.       
Among 10 companies, which went public in 2012, three were from textile sector. Among those textile companies, Envoy Textiles raised Tk 900 million, Generation Next Fashions Tk 300 million and Saiham Textiles Tk 950 million.
In 2013, Paramount Textiles raised Tk 840 million, Familytex (BD) Tk 340 million and Argon Denims Tk 1.05 billion.
In 2014, Hamid Fabrics raised Tk 1.05 billion, Far East Knitting and Dyeing Industries Tk 675 million, Tung Hai Knitting and Dyeing Tk 350 million, Hwa Well Textiles (BD) Tk 200 million, Matin Spinning Tk 1.26 billion and Mozaffar Hossain Spinning Mills Tk 275 million.
In 2015, Shasha Denims raised Tk 1.75 billion, C & A Textile Tk 450 million, Tosrifa Industries Tk 638 million and Zahin Spinning Tk 120 million.
Md. Atiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said it would be positive for the textile sector if the companies raise funds from the capital market.
"A listed company has to comply with securities rules along with holding Annual General Meeting (AGM) as part of ensuring accountability. But the companies existing just on papers should not be allowed to raise funds from the capital market," Mr Islam told the FE.
Asif Moyeen, managing director of the Far East Knitting and Dyeing Industries which went public in 2014, said the objective of going public is not the same for all companies having different business strategies.
"The objective of the textiles companies to go public includes, among others, repayment of bank loans," Mr Moyeen said.
He said after going public, the use of IPO funds reveals the objective behind it.
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