Family-run giants still market-shy

Big family businesses mainly shun stockmarket listing because they do not want to dilute the ownership of their hard-earned assets to others, but there are other factors at work as well, analysts said.
Investment analysts have cited the conditions for listing, such as the reporting of profits and high paid-up capital, as some of the hindrances to such listing.
Large family-owned and partnership conglomerates, such as Akij, Meghna, City, Abul Khair, TK, S Alam, Opex Sinha, Noman, Nassa, MGH, Nasir and Adbul Monem, have more than Tk 3,000 crore each in annual turnover, but are not listed on the bourses and have no plans to do so.
“Why should we share our ownership with others?” asked Sk Bashir Uddin, managing director of Akij Group. “The first generation, my father, built it with hard work,” said the heir apparent of a concern that owns 40 businesses with a combined annual turnover of more than Tk 6,000 crore.
The simplicity of the process in a family business is another reason for not listing the company on the market. He sees high cost of equity as another major barrier.
Another leading industrialist, who has a group of industries with Tk 3,000 crore in annual turnover, put the blame partly on tax officials.
“The tax officials take huge bribes, so often we show some of our concerns as losing ones,” said the businessman who requested anonymity.
Bangladesh's stockmarket is getting volatile everyday due to severe shortages of stocks against the demand. New investors across the country coming into the market have left it being labelled a bubble. More than 30 lakh investors are running after stocks of barely 250 companies. Market capitalisation in Dhaka Stock Exchange has more than doubled in just one year.
The government has been looking to offload shares of its companies, but this is yet to slake the thirst of the investors. But a reversal of big private businesses' apathy to get listed would greatly expand the market's offerings.
Ifty Islam, an investment analyst, said private companies do not come into the market because they do not want to give up the control of management.
Islam finds the rules for setting an IPO (initial public offering) price were a major barrier for the private companies.
“I am optimistic now with the book-building system that offers higher price. I hope a lot of private companies will hit the market in a few years,” said the analyst.
A senior manager at Race Asset Management asked the tax authorities to be more lenient with the private companies that want to join the stockmarket. These companies have thousands of crores of taka in annual turnover, but their paid-up capital are too low for listing.
“The tax authorities can allow companies to legalise their untaxed money like how the government did it for the individuals,” he said.
Good news is that Meghna Group of Industries, a conglomerate with Tk 7,000 crore annual turnover, plans to list three of its concerns by the middle of next year to raise funds for expansion.
“I need to go to the stockmarket to further the growth of my business and to develop its corporate culture,” said Mostofa Kamal, chairman of the group, which has business ranging from consumer essentials to cement and power.

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