Some 39 companies are awaiting regulatory approval to raise around Tk 2,100 crore from the capital market by way of initial public offerings. IPO is the first sale of a stock of a private company to the public.
The companies, tied to the textile, power, real estate, ship building, manufacturing, engineering and financial sectors, have already submitted their IPO proposals to the Bangladesh Securities and Exchange Commission.
Of the companies, 37 plan to use the fixed price method, where the price at which the securities are offered is made known to the investors in advance.
The other two companies have opted for the book building system, where the issuers do not fix up a single price for the securities but provide a price range. Investors put their bid within the price range and depending on the demand and supply of the units, the final price is decided.
A BSEC official said the stockmarket regulator takes time to green-light the IPO proposals, with two applications approved on average every month. Merchant banks, who handle the IPOs, however, are urging the regulator to expedite the process for companies with good fundamentals, as the secondary trading market is finally picking up after a two year-long bearish trend.
If a company 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 Md Akter Hossain Sannamat, managing director of the merchant bank Union Capital.
The more the investors have access to fundamentally strong securities, the lesser will be the rush to purchase junk companies' shares, he said.
Sannamat, also the vice-president of Bangladesh Merchant Bankers Association, said companies are showing their interest to raise funds from the capital market through IPOs of late.
In 2013, 15 new companies held their IPOS, raising around Tk 1,200 crore in the process.
As of yesterday, the total number of listed securities on the Dhaka Stock Exchange stood at 530.