IPO shooting stars in capital market frustrate investors
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard

Thursday
June 30, 2022

Sign In
Subscribe
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
  • Epaper
  • More
    • Subscribe
    • COVID-19
    • Bangladesh
    • Splash
    • Videos
    • Games
    • Long Read
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
THURSDAY, JUNE 30, 2022
IPO shooting stars in capital market frustrate investors

Stocks

Salah Uddin Mahmud
24 November, 2021, 10:25 pm
Last modified: 24 November, 2021, 10:28 pm

Related News

  • Asian stocks lose bounce from shorter China quarantine, slip on inflation fears
  • Stocks gain sharply for day and week, while copper falls further
  • Stocks temper their inflation expectations on copper pounding
  • Swiss policy pivot signals exit for big stock and bond investor
  • Asia shares struggle, oil tumbles as recession fears heighten

IPO shooting stars in capital market frustrate investors

Experts urged the regulators to enhance supervision of IPO fund utilisation by the listed companies

Salah Uddin Mahmud
24 November, 2021, 10:25 pm
Last modified: 24 November, 2021, 10:28 pm
Infograph: TBS
Infograph: TBS

At least 10 companies have entered the capital market showing high hopes in the last couple of years but they deviated from their commitments after raising funds and deprived the investors, according to the Dhaka Stock Exchange (DSE).

These firms showed an ambition for rapid growth and urgency of investment before listing. They also presented their products' potentiality and future demand in an inflated fashion.  Some companies also overstated their financial statements tactfully, alleged the investors. 

General investors usually make decisions to invest in a new firm after analysing its prospectus, but they suffer and feel cheated when the firms forget their commitments after raising the fund through initial public offering (IPO).

For example, Aman Cotton Fibrous Ltd collected Tk80 crore from the share market to buy new machinery and repay its loans in August 2018. So far, the company has only repaid its loans but it has neither set up any new machinery nor expanded its business. The fund has generated Tk15 crore as interest till September 2021.

In another similar instance, Regent Textile Ltd collected Tk125 crore from the capital market in 2015 to renovate its factory and start a new readymade garment project. But after five years, the company decided to acquire a 99% stake in its group sister concern Legacy Fashion Limited with the money they collected through IPO. 

Alif Manufacturing Company raised Tk109.40 crore by issuing the rights share in 2018, but the company has not been able to utilise the fund till now.

Golden Harvest Agro Industries also raised Tk89.93 crore by issuing the rights share in 2019, but the company has not used the fund so far.

Entrepreneurs said most of the companies could not work properly amid the pandemic as it was not possible to import machinery during the period.

Even after the situation started to return to normal, it was tough to get containers for importing machinery, they said.

Besides, currently getting delivery of the imported machines needs more than six months after opening a letter of credit (LC) due to the crisis of containers, they added.

Professor Abu Ahmed, a capital market analyst, said, "Some entrepreneurs do this as they have ill motives. The regulator should tighten conditions and supervise the IPO fund utilisation to minimise this malpractice gradually."

"Regarding the matter, the regulator can follow the practice in neighboring countries," he added.

Dr Mizanur Rahman, commissioner of the Bangladesh Securities and Exchange Commission, said, "The commission has been reviewing some companies who are delaying to use the IPO funds within the stipulated time. We are trying to find out the reasons behind it."

"Besides, the commission held discussions with the companies and forced them to use funds continuously," he added.    

Top News

IPO / IPO fund utilisation / stocks / Fund

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Representational image
    Curbs on amnesty, ease for corporate tax
  • Luxury Houseboat owners  distributed food, provided medical assistance, and shelter to the flood victims, till the flood waters receded Photo: Masum Billah
    The first responders: How luxury houseboats became rescue centres for flood victims
  • RnB artist R Kelly. Photo: Getty Images via BBC
    US Artist R Kelly sentenced to 30 years on sexual abuse charges

MOST VIEWED

  • Rice bran oil Spondon back after five years
    Rice bran oil Spondon back after five years
  • Robi searching for CEO 10 months after the last one resigned
    Robi searching for CEO 10 months after the last one resigned
  • Infographic: TBS
    BSEC to appoint a special auditor to review IPO fund usage of Intraco Refueling
  • Photo: Collected
    Revenue growth 15% in July-May
  • Infographic: TBS
    BSEC asks Rupali Bank to explain provision shortfall, failures to pay cash dividends
  • BSEC okays draft prospectuses of two mutual funds
    BSEC okays draft prospectuses of two mutual funds

Related News

  • Asian stocks lose bounce from shorter China quarantine, slip on inflation fears
  • Stocks gain sharply for day and week, while copper falls further
  • Stocks temper their inflation expectations on copper pounding
  • Swiss policy pivot signals exit for big stock and bond investor
  • Asia shares struggle, oil tumbles as recession fears heighten

Features

Dr M Mushtuq Husain. Sketch: TBS

'We did not face an extreme crisis with Omicron. But this wave is spreading faster'

22m | Interviews
Luxury Houseboat owners  distributed food, provided medical assistance, and shelter to the flood victims, till the flood waters receded Photo: Masum Billah

The first responders: How luxury houseboats became rescue centres for flood victims

1h | Panorama
Mahathir accused financial titans of seeking to reverse decades of economic development that propelled tens of millions into the middle class. Photo: Bloomberg

George Soros, Mahathir and the legacy of 1997

20h | Panorama
 If Bangladesh produces and exports high-value-added MMF products right now, we can increase our total export by around 25% in value. Photo: Mumit M

Time ripe for Bangladesh RMG sector to focus more on man-made fibres

23h | Panorama

More Videos from TBS

Khaled Masud  Pilot starts his second innings in restaurant business

Khaled Masud Pilot starts his second innings in restaurant business

1h | Videos
Severodonetsk now under Russian control

Severodonetsk now under Russian control

13h | Videos
South African boy drove ambition, says Elon's father

South African boy drove ambition, says Elon's father

13h | Videos
Why Dollar crisis will last long?

Why Dollar crisis will last long?

13h | Videos

Most Read

1
Padma Bridge from satellite. Photo: Screengrab
Bangladesh

Padma Bridge from satellite 

2
Meet the man behind 'Azke amar mon balo nei'
Splash

Meet the man behind 'Azke amar mon balo nei'

3
Photo: TBS
Bangladesh

Motorcycles banned on Padma Bridge 

4
Photo: Courtesy
Corporates

Gree AC being used in all parts of Padma Bridge project

5
Photo: Collected
Economy

Tech startup ShopUp bags $65m in Series B4 funding

6
World Bank to give Bangladesh $18b IDA loans in next five years
Economy

World Bank to give Bangladesh $18b IDA loans in next five years

EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2022
The Business Standard All rights reserved
Technical Partner: RSI Lab
BENEATH THE SURFACE
Workers unload sacks of paddy at the BOC Ghat paddy market on the bank of the Meghna River in Brahmanbaria’s Ashuganj, the largest paddy market in the eastern part of the country. This century-old market sells paddies worth Tk5-6 crore a day during the peak season. PHOTO: RAJIB DHAR

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net