Lengthy listing process scares off good firms

Large and well-performing companies feel discouraged because of the lengthy process they have to go through to enter the stock market, experts said yesterday.

The other impediments to the entry of good stocks include the lack of willingness to maintain transparency and accountability, availability of long-term bank loans, tendency of tax evasion and lack of corporate governance, they opined.

Some companies do not want to bring its shares to the capital market to avoid the possible chaos that the shareholders sometimes create during the annual general meetings, the experts said.

They made the comments in a seminar that took place on the sidelines of Bangladesh Capital Market Expo-2019 at Bangladesh Shilpakala Academy in Dhaka.

Online financial news portal arthosuchak.com organised the three-day exposition that ended yesterday.

M Nasimul Hye, company secretary of Bashundhara Group, said they had to wait more than six years to bring a company of the group to the stock market through the book-building method.

“All our efforts lost momentum. We lost some potential international business also due to the time-consuming process.”

Every company has to use the book-building method if it wants to get a premium over the face-value of each share it is issuing.

Book-building is a process through which a company tries to determine the price to offer for its stocks based on the demand from institutional investors. Hye said they had to wait one and a half years even after organising the road-show, which every company has to organise to highlight its business potential.

“Our sponsors even wanted to withdraw the IPO [initial public offering] proposal thrice. However, we were finally able to get our company enlisted.”

The group cancelled its plan to bring three other companies to the market due to the delay in the process, he said.

Compliance is a major issue behind the reluctance of the big companies to come to the stock market, said Masud Khan, CEO of Crown Cement.

Instead of entering the stock market, they prefer maintaining a distance from it, said Khan, also a former chief financial officer of LafargeHolcim Bangladesh.

There should be a bar on big loans for the non-listed companies so that they have to go to the stock market for financing large projects, said Mahfuzur Rahman, chief business development officer of United Securities.

The National Board of Revenue should be stricter so that non-listed entities cannot evade taxes, he said.

Stock investors will remain deprived of the good stocks if good companies do not come to the market, said Sajjadur Rahman, business editor of The Daily Star.

So, the stock market regulator should take necessary steps to bring them to the market, said Rahman, who also moderated the seminar.