More than six months after the new government took office, Bangladesh’s stock market is still facing a prolonged drought in initial public offerings (IPOs), with the Bangladesh Securities and Exchange Commission (BSEC) yet to approve an IPO of any new company.
The last IPO approval came in March 2024, when the BSEC approved the initial public offering of Techno Drugs. Since then, no new company has received approval to enter the stock market, according to the report.
The new government took office on February 17, while the new BSEC commission assumed responsibility on June 4. However, even after three months under the new commission, no company had formally submitted an IPO application to raise funds from the capital market.
Market participants had expected IPO applications to increase with the start of the new fiscal year, as companies seeking to raise funds through the stock market are required to submit audited financial statements covering the previous 180 days. That expectation, however, has not materialised.
The prolonged suspension of IPO activity has narrowed an important source of long-term financing for business expansion, forcing companies to rely more heavily on bank loans and internally generated funds. BSEC officials said there are currently no IPO applications or proposals awaiting approval before the commission.
Market insiders said several established and financially strong companies remain interested in raising long-term capital through the stock market. However, their interest has yet to translate into formal IPO applications.
Several merchant bankers, speaking on condition of anonymity, said they are preparing a number of potential companies for IPOs. Many companies, however, are waiting for greater clarity in the regulatory framework before submitting applications.
BRB, DBL, City and Confidence are among the major business groups reportedly being discussed as potential IPO candidates.
The new BSEC commission has placed emphasis on bringing large and quality companies to the stock market. BSEC Chairman Masud Khan recently said that the listing of established local and multinational companies could help strengthen the capital market.
He also said the commission aims to bring several important and leading companies to the stock market within the next six to 12 months.
Market sources said around 18 public offering proposals, including IPO applications, have been rejected or withdrawn at different stages since March 2024. If implemented, these proposals could have raised around Tk 1,000 crore from the stock market.
The decline in IPO activity is also reflected in annual fundraising figures. In 2024, four companies raised Tk 645 crore through IPOs, compared with around Tk 202 crore raised by four companies in 2023.
In 2022, six companies raised Tk 626.26 crore through IPOs, while 15 companies raised Tk 1,858.44 crore from the stock market in 2021.
Market participants identified several reasons behind the prolonged IPO drought. Company valuation is one of the major concerns, as entrepreneurs fear that an unfavourable valuation could hurt their interests when they sell part of their ownership through an IPO.
Repeated changes to the IPO framework and regulatory uncertainty have also made potential issuers cautious. Many companies are therefore monitoring the situation before making formal applications.
Companies are also concerned about the additional compliance burden following listing, including financial reporting, auditing, corporate governance and the appointment of independent directors.
Entrepreneurs also want greater flexibility in using IPO proceeds, particularly for business expansion and repayment of high-interest bank loans.
Analysts said the IPO crisis is no longer limited to the approval stage; the pipeline of new applications itself has virtually dried up. There are currently no IPO applications awaiting approval at the BSEC.
Although 66 licensed merchant banks are working with potential issuers, many companies are waiting for a more stable and predictable regulatory framework before moving forward.
To address the situation, the capital market reform task force has recommended simplifying the IPO process, including shortening procedures, reducing regulatory fees, easing compliance requirements and introducing digital application submission.
The key challenge for the government and the BSEC is now to establish a stable and effective framework that encourages quality companies to move from initial interest to formal IPO applications. Reviving the pipeline of new issuers will be crucial to restoring Bangladesh’s primary capital market.
