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on track to raise funds from capital market, the Dhaka Stock
Exchange president said yesterday. "The companies are in the pipeline
to go for initial public offering," said Rakibur Rahman. Hosaf Group,
The Westin Dhaka and United Hospital are among the companies that
have set sights on capital market. The disclosure came after
reporters queried why the DSE would not allow listing of any company
with paid-up capital below Tk 50 crore. The DSE decided against the
low-cap companies at a meeting on Tuesday to curb price
manipulation. Rahman said the bourse in recent times has received
proposals from many low-cap companies to raise capital. "But it seems
to us that most are now facing hurdles in business following the
recent global financial crisis. They choose our market as an exit
point through offloading their shares," he said. If a company's IPO
size is small -- meaning a small number of shares to trade -- it is
easy to manipulate the prices. It was seen in many times that some
investors pack the shares into their portfolios, creating an
artificial crisis in the market, Rahman said. "We can't allow them to
do so," he said. Asked whether the DSE is discouraging companies with
low paid-up capital to list on the bourses, he said: "No. It is being
practiced in our neighbouring countries as well." But, he said, in
those countries there are alternative or over-the-counter (OTC)
markets for low-cap companies. "Our OTC market will remain open to
low-cap companies," Rahman said. "The latest IPO of Grameenphone
indicates that our market is ready to absorb big IPOs," Rahman said.
"The Dhaka market can alone absorb an IPO worth Tk 500 crore every
month," Rahman said. On Tuesday's meeting, the DSE also decided that
a company would have to go for IPO with a minimum of shares
equivalent to 25 percent of its paid-up capital to get approval for
listing on the bourse. Also, the DSE decided that if the IPO size is
25 percent of a company's paid up, there would not be any allocation
for private placement. A private placement, practised by new issuer
companies currently, is a funding round of securities that are sold
without an IPO, usually to chosen private investors. DSE's decisions
however will have to be approved by the market regulator, Securities
and Exchange Commission.
