No progress in public companies going public
A file photo shows a man monitoring the stock market on a computer. — New Age Photo
No public company has gone public in the last 10 years mainly due to government apathy and corporate reluctance.
The government has taken several initiatives since 2007 to list state-owned companies on the stock market, but was only able to list Bangladesh Submarine Cables Company in 2012.
On February 2, 2020, Finance Minister AHM Mustafa Kamal said the government ordered five energy companies to go public and gave them two months to assess the current value of their assets before offloading the companies’ shares.
However, no company has filed IPO documents with the Bangladesh Securities and Exchange Commission so far.
Apart from the Finance Minister’s instruction, the BSEC on December 9, 2021 has urged 17 SOEs to be listed on the stock exchange to achieve excellence in business standards, but no visible progress has been seen so far.
University of Dhaka Honorary Professor Abu Ahmed told New Age that government companies do not want to be listed on the stock exchange as they have to maintain various compliances and remain under regulatory scrutiny.
“Company officials usually try to avoid the registration process to escape additional workload and to protect their own interests,” he said.
Despite huge losses year after year, the government continues to operate some businesses without making any improvements, Ahmed said.
The government must be serious about listing profit-making state-owned companies on the stock market and also take steps to recover loss-making companies, he said.
Officials of several public companies said transferring shares on the stock market was a complex and time-consuming process.
A company must obtain approvals from different ministries to take steps to go public, they said.
In addition, a company’s assets must be revalued and government shares deposited in the company must be converted into shares before listing on the market, which delays the listing process.
On February 11, 2020, the Financial Reporting Council issued a notice requiring companies to convert equity deposits into shares within six months.
BSEC officials said unlisted state-owned companies generally do not adhere to accounting standards and the corporate governance code.
However, companies must prepare financial statements that comply with the Bangladesh Financial Reporting Standards to be listed on the stock exchange.
In addition, companies must adhere to corporate governance codes.
Consequently, state-owned companies have remained reluctant to list on stock exchanges to avoid such compliance issues.
There are only 19 public companies listed on the stock exchange.
BSEC Director General Rezaul Karim told New Age that if SOEs enlist in the stock market and abide by securities rules and regulations, companies could establish corporate governance and also increase the brand image and innovation that were necessary to remain globally competitive.
Company assets need to be revalued and restructured to be profitable, he said, adding that public companies usually have huge assets and are not revalued at the current market price.
The revaluation method is very complex and time consuming.
Thus, companies have no intention of revaluing assets, Rezaul said.
Public companies have a common misconception that companies wouldn’t get decent prices if they went public, he said.
However, companies can get an appropriate price if the revaluation of entities’ current assets and liabilities is done correctly, he said.
For example, the share price of Bangladesh Submarine Cable Company, which was the last public company listed on the stock exchange, rose day by day.
The company declared a 37% cash dividend in 2021. The company declared EPS of Tk 11.57 for the year ended 2021 compared to Tk 5.49 the previous year. BSCCL’s share price closed at Tk 223.8 each on April 21.
Former acting government adviser and chairman of the Bangladesh Securities and Exchange Commission, AB Mirza Azizul Islam, told New Age that strong political determination was needed to list government companies on the stock market, adding that senior officials companies dithered through the registration process for many years. as their responsibility increases.
Enlisting companies would enhance market depth and investors would have good securities for investments, he said.
The 17 companies which have been invited by the BSEC to list on the stock exchange are Bakhrabad Gas Distribution Company Limited (a Petro Bangla Company), LP Gas Limited, Gas Transmission Company Limited, Jalalabad Gas Transmission and Distribution System Limited (a Petrobangla), Sylhet Gas Fields Limited, Bangladesh Gas Field Company Limited, Rupantarita Prakritik Gas Company Limited, North-West Power Generation Company Limited, Electricity Generation Company of Bangladesh Limited, Pragati Industries Limited, Karnaphuli Paper Mills Limited, Bangladesh Insulator and Sanitaryware Factory Limited , Hotels International Limited, Biman Bangladesh Airlines Limited, Bangladesh Telecommunication Company Limited, Bangladesh Cable Shilpa Limited and Essential Drugs Company Limited.