Roadmap for An IPO In Bangladesh: A Guide to Going
Initial public offering in the capital market of Bangladesh has a long way to go. The government of Bangladesh has begun to positively cater to the aspects of the capital markets. The transitional government has implemented investor-friendly policy reforms in recent years.
After that, it is expected that Bangladesh’s capital market will be a critical growth player compared to India, Vietnam, and otherworld dynamic economies. Here is a roadmap to the eGeneration IPO in Bangladesh, which is among the top growing stock market.
Initial Public Offering the Decision to Go Public
Companies need to assess their readiness for the capital market as a public company, especially in a country like Bangladesh. Regulatory reforms are still being addressed.
The management should take market expectations from shareholders, right from the beginning.
Legal procedural guidelines should adhere, and no measures of compliance should be left behind. The company offering IPO should look after the below factors before launching it into the public.
- Risk management
- Periodic reporting
- Regulatory requirement
- Operational effectiveness and
- Investor relations
Dhaka Stock Exchange Listing Follows Guidelines for an IPO
The appointment of an issue manager is necessary for a company to get listed on DSE.
Submission of the Draft Prospectus
The issues manager is responsible for preparing a draft prospectus. Post preparation, he has to submit it to the DSE and SEC for approval and other documents.
Drafting an Agreement
The agreement letter for IPO has to be prepared by the investment bank and issue manager.
Analysis by the DSE Of the Draft Prospectus
DSE will examine the performance ratio and financial aspects of the company offering IPO.
SEC Analysis of the Draft Prospectus
Post review and analysis, DSE shares feedback with SEC withing 15 days
Applying for the DSE
Upon receiving approval from DSE, the issue manager must apply to the DSE to list the company’s securities offering IPO.
Post sending an application to the DSE, the company must open a subscription for the general public.
Decision by DSE – Application for Listing
A DSE board meeting decides the status of the issue manager’s application for the listing of securities.
IPO Data Transmission
Once all approvals come along, the IPO data transmission software successfully stores the company’s IPO data.
Factors Affecting IPO In Bangladesh
The Bangladesh stock market crashed during the year 2010-2011. Small investors suffered a huge loss. Since then, the Dhaka stock exchange has recorded 85% growth in the listed companies through IPO. For instance, companies like eGeneration have partnered with the Bangladesh Government to reform the financial sector with automation.
This has been during the last decade. With an average of 14.80 IPOs recorded during a single year. Most of the IPOs in Bangladesh followed the fixed price method. The book-building method involved only 2.7 % of the IPOs.
The earning forecast of Bangladesh revealed a phenomenon where multiple regression models indicated that the offer price negatively influenced the IPO subscriptions. There have been studies on the existing scenario of IPO in Bangladesh and reforms to undertake the exact course needed for an initial public offering.