The Initial Public Offering (IPO) process in Bangladesh is regulated by the Bangladesh Securities and Exchange Commission (BSEC) and involves several stages, from application to listing on the Dhaka Stock Exchange (DSE) or Chittagong Stock Exchange (CSE). Below is a simplified breakdown of the IPO process:
1. Eligibility & Preparation
§ A company must meet BSEC’s eligibility criteria, including:
§ Minimum paid-up capital (varies for different market tiers).
§ At least three years of profitable operations (with some exceptions for tech/growth companies).
§ Proper audited financial statements (last 3 years).
§ Compliance with corporate governance guidelines.
2. Hiring Advisors
The company appoints:
§ Issue Manager (Merchant Banker) – Handles IPO documentation, due diligence, and BSEC liaison.
§ Auditor & Legal Advisor – Ensures financial and regulatory compliance.
§ Underwriter (if required) – Guarantees share subscription.
3. Due Diligence & Draft Prospectus
§ The Issue Manager conducts due diligence on the company.
§ A Draft Prospectus (IPO Application) is prepared, including:
§ Business model, risks, financials.
§ Purpose of IPO (fund utilization).
§ Offer price, number of shares, and issue size.
4. Submission to BSEC
The company submits the IPO application along with:
§ Audited financials.
§ Valuation report.
§ Board resolutions & legal documents.
§ BSEC reviews the application (may ask for clarifications).
5. BSEC Approval & Public Offer
§ Once approved, the company:
§ Publishes the Prospectus in newspapers.
§ Opens subscription for investors (usually 15-30 days).
§ Fixed-price IPOs: Price set by BSEC based on valuation.
§ Book-building IPOs: Institutional investors bid to determine price.
6. Allotment & Refund
After subscription closes:
§ Lottery system for oversubscribed IPOs (retail investors).
§ Allotment finalized within 30-45 days.
§ Unsuccessful applicants get refunds.
7. Listing on Stock Exchange
§ Shares are credited to investors’ BO accounts.
§ Trading begins on DSE & CSE (usually within 7-10 days after allotment).
Key Challenges in Bangladesh’s IPO Process
§ Lengthy Approval – BSEC review can take 6-12 months.
§ Oversubscription Issues – Popular IPOs get 10x+ demand, leading to lottery-based allotment.
§ Pricing Disputes – Fixed-price method sometimes undervalues companies.
Recent Reforms & Digital Improvements
§ Electronic IPO (E-IPO) system introduced for easier application.
§ Green/sustainable bonds encouraged for eco-friendly projects.
§ Startup/IPOs – BSEC easing rules for tech firms.
Conclusion
Bangladesh’s IPO process is structured but can be slow. Companies must ensure strong financials and transparency for approval. Investors should analyze the prospectus carefully before applying.
Share This News