The majority of merchant banks have failed to do IPOs (initial public offering) over the past decade.

During the period, a total of 115 companies went public by raising capital through IPOs and 32 IPOs of them were handled by just three merchant banks.

The remaining 43 investment bankers managed 83 IPOs during the period 2012-2022 and 20 investment bankers had no role in completing an IPO.

Speaking to the FE, a senior Bangladesh Securities and Exchange Commission (BSEC) official said they have become tougher on merchant banks with no role in the IPO.

“BSEC has already canceled the license of merchant banks that failed to do a single IPO. stock exchange,” the BSEC official said on condition of anonymity.

A merchant bank is a financial institution that manages portfolios and performs underwriting, lending, financial advisory, and fundraising services for large corporations and high net worth individuals.

The three merchant banks that have managed the most number of IPOs are ICB Capital Management, LankaBangla Investments and IDLC Investments.

ICB Capital, a subsidiary of the state-owned Investment Corporation of Bangladesh (ICB), has managed 13 IPOs alone. The company has also managed six IPOs jointly with other investment banks.

As a result, ICB Capital managed a total of 19 IPOs alone and jointly during the period 2012-2022.

LankaBangla Investments managed 11 IPOs alone while it managed another jointly with another merchant bank during the period.

IDLC Investments has managed eight IPOs alone and has not managed any joint IPOs for the same period.

BSEC commissioner Dr Shaikh Shamsuddin Ahmed said the securities regulator did not feel comfortable talking about the role of merchant banks in delivering quality IPOs.

“The role of investment banks is not yet enough to convince good companies to sell their shares,” Ahmed said.

He said it is not the role of the securities regulator to convince or inspire a company to go public.

“Nevertheless, the securities regulator is working informally to entice good companies to go public. We are pushing stock exchanges and merchant banks to expedite communications with companies with good prospects,” the BSEC commissioner said. , Mr Ahmed.

He said it is the exchanges’ responsibility to expedite communication with potential companies.

“It is expected to be listed within three years of obtaining the bank’s license. But we don’t know why five banks haven’t yet come forward to launch IPOs,” the commissioner said. the BSEC.

He said the securities regulator had recently written to the central bank to find out the reasons for the delay in the listing of these five banks.

Asked about the issue of IPOs, the BSEC commissioner said he had cleared the backlog of previously submitted IPOs.

“In that sense, there’s nothing about the pipeline and now it doesn’t take long enough to approve an IPO proposal,” Mr. Ahmed said.

Mohammad Rezaul Karim, executive director and spokesperson of BSEC, said there were currently five IPOs under regulatory review.

Out of five IPOs, two were submitted using the fixed price method while the other two are submitted using the book building method.

When questioned, the Secretary General of the Bangladesh Merchant Bankers Association (BMBA), Riyad Matin, said that many merchant banks lack the capacity to handle IPOs and conduct marketing activities for good companies.

“Lack of good professionals is a reason behind handling insufficient number of IPOs. The fees charged for handling an IPO are also not sufficient considering the time required to prepare a business to go public,” said Matin.

He said the problem is that many companies are unwilling to go public during the prime days of their operations.

“Many companies only feel the need to go public when they face a capital crisis. The securities regulator is trying to speed up the activities of merchant banks to increase the quality of IPOs “said Mr Matin.

Apart from three investment banks which managed a total of 32 IPOs, Prime Finance Capital managed four IPOs only, while AAA Finance managed four IPOs and Alliance Financial also managed four IPOs during of the last decade.

In addition, MTB Capital managed three IPOs, Banco Finance three IPOs, NRB Equity three IPOs, Janata Capital three IPOs, BRAC EPL Investments two IPOs and Shahjalal Equity two IPOs.

Each of the 10 investment banks, including AFC Capital, BD Finance Capital, Betaone, Citizen Securities, First Securities Services, Sonali Investment and Union Capital, managed an IPO in 2012-2022.

AFC Capital has co-managed the largest number of IPOs in the past decade. The company managed 12 joint IPOs with other merchant banks during the period.

The IPO of the second largest mobile operator Robi Axiata was managed by IDLC Investments. The company raised a fund worth 5.23 billion taka from investors and its employees and surpassed the fund worth 4.86 billion taka raised by Grameenphone.

Walton Hi-Tech Industries’ IPO was managed by AAA Finance & Investment. The company also managed the IPO of Bashundhara Paper Mills.

Among other investment banks, BRAC EPL managed the IPO of Unique Hotel & Resorts and Union Bank.

ICB Capital Management managed the IPOs of South Bangla Agriculture & Commerce Bank, ADN Telecom, Ashuganj Power Station Company (Bond), Aman Cotton Fibrous, The Acme Laboratories, Saif Powertec, Shurwid Industries, Appolo Ispat Complex, Bengal Windsor Thermoplastic, Orion Pharma, Bangladesh Submarine Cable Company and GSP Finance Company (Bangladesh).

Of 115 companies that went public in 2012-22, 19 are currently suffering losses.

A company can be listed on the stock exchange using both the fixed price method and the order book method.

Out of 115 companies, 12 were listed using the book building method.

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