A total of 17 new companies were listed on the Dhaka Stock Exchange (DSE) in the outgoing calendar year, highest in the last four years since market debacle in early 2011.
These new securities raised an estimated Tk 9.98 billion from public through initial public offering (IPO), including premium of Tk 5.50 billion in 2014, according to statistics from the Dhaka Stock Exchange (DSE).
In 2010, a total of 23 firms were listed that raised around Tk 35 billion through IPO, so far, when the market was bullish. The figure was 14 in 2013 with a value of Tk 8.33 billion. In 2012, 14 new securities were listed and 15 securities listed in 2011, the DSE data showed.
The new companies are: Mozaffar Hossain Spinning, AFC Agro Biotech, Emerald Oil Industries, Matin Spinning Mills, Hwa Well Textiles, FAR Chemical Industries, The Peninsula Chittagong, Shajibazar Power Company, Khulna Printing & Packaging, Tung Hai Knitting & Dyeing, Shurwid Industries, Far East Knitting & Dyeing, Saif Powertec, Ratanpur Steel Re-rolling Mills, Western Marine Shipyard, Khan Brothers PP Woven Bag Industries and Hamid Fabrics.
Of them, eight companies took premium -- Matin Spinning took a premium Tk 27, Peninsula Chittagong Tk 20, Shahjibazar Power Tk 15, Far East Knitting & Dyeing Tk 17, Saif Powertec Tk 20 and Ratanpur Steel Re-rolling Mills Tk 30, Western Marine Tk 25 and Hamid Fabrics took a premium Tk 25 against each a Tk 10 share.
With the inclusion of the new securities, the total number of listed companies on the DSE presently stands at 547 as on December 22, 2014.
This year was particularly busy for textile firms that accounted for one-third of all IPOs and there was no mutual fund listed in 2014, the DSE data shows.
Despite many odds, Bangladesh's apparel industry which accounts for 80 per cent of the country's total exports has been growing faster than any other sector. It requires funds to expand, so textiles companies queue in the IPO.
Pricing of the new securities in the secondary market was better than the previous year, as the market was in recovery, breaking the previous three years' bearish trend from the market crash in early 2011, market insiders said.
DSEX, the prime index of the DSE, gained 602 points or 14.10 per cent over the previous year to reach 4,868.47 points till Monday (December 22).
"The IPOs were oversubscribed manifold, while stock pricing in the secondary market was better this year than the previous year," said Akter H Sannamat, managing director of Union Capital.
He said that the better days are ahead as many companies are interested in coming to the market to raise working capital. "The number of IPOs will increase in the coming year," he added.
However, some said though it is the vibrant year for listed securities in terms of number, quality of most of the companies is weak. Most of them are low-cap, even questions arose some of them about their financial statements.
Some investors have also brought allegation against some companies that they provided false and fabricated information in its IPO prospectus. The scurrilities regulator also took actions against some companies, though it was late.
AB Mirza Azizul Islam, former finance adviser to the caretaker government, suggested the regulator to become more cautious before giving IPO approval for the betterment of the market as well as investors.
"If a company's financial strength is good, it can be permitted even with premium. But if the fundamentals are weak, it should not be allowed even with the face value," said an analyst, seeking anonymity.
One of the main responsibilities of a merchant bank is to bring new securities into the market.
Presently, there are 56 registered merchant banks in Bangladesh. If each firm acts as an issue manager for a single firm in a year, there should be at least 56 IPOs in the market. But unfortunately, the number is low compared to the capacity of merchant banks.
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