Move to increase procedure to list small-cap companies

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The securities regulator will sit with some small-cap companies this week to discuss their listing with the bourses under the SME board introduced earlier to facilitate the raising of capital by such companies.

The Bangladesh Securities and Exchange Commission (BSEC) has taken the initiative following completion of necessary preparation necessary to open functions of the SME boards on both stock exchanges of the country.

"After introduction of rules for the SME table, the stock exchanges are suffering from software to carry out trading of the shares found in the small-cap firms. We will stay with some corporations this week to accelerate their listing method," said Prof. Shaikh Shamsuddin Ahmed, a BSEC commissioner.

Necessary preparations have already been accomplished at the regulatory end to help make the SME boards functionable soon, he said.

"We will keep a meeting with some small-cap corporations to know their targets and preparations for raising capital through the SME boards," he added.

To accelerate the growth of small-cap firms, the securities regulator formulated guidelines titled 'Bangladesh Securities and Exchange Commission (Qualified Investor Give by Small Cap Businesses) Rules, 2018.

The companies' IPO (initial public offering) proposals will be allowed under both fixed price and book-building methods.

After raising capital through qualified investor offer (QIO), a company's paid-up capital will be at least Tk 50 million and the figure wouldn't normally cross Tk 300 million.

Three small-cap companies possessed earlier submitted IPO proposals for their listing beneath the SME boards.

Speaking with the FE, a service official said they happen to be yet to have the approval by the securities regulator designed for the IPO proposal.

In this regard, Mr. Ahmed stated the incumbent commission offers adopted an insurance plan of clearing the pending IPO proposals with no delay.

"If the issuer itself does not fulfill the queries in time, the regulatory approval for any IPO proposal could easily get delayed, if any," he said.

Mr Ahmed said the BSEC will sit with the small-cap corporations to accelerate the procedure of listing with the SME plank. "Hopefully, we will sit down with them on Mon," he added.

According to the tips of the SME Program, simply the qualified investors may submit their intention a subscription the issue provided by the SMEs for raising fund.

The qualified investors include merchant bankers and portfolio managers, asset management companies, mutual funds and collective investment scheme (CIS), stock dealers, banks, finance institutions, insurance companies, alternative investment fund managers, alternative investment funds, market makers, issuer of listed securities, resident or non-resident Bangladeshis, individuals having minimum amount net worth of Tk 10 million and additional institutions as approved by the commission.

In early on 2020, the Nialco Alloys, a company of grade bronze and brass ingots, submitted its IPO proposal to be listed with the SME plank.

The business will raise a capital worth Tk 100 million through the SME board of the Chittagong STOCK MARKET (CSE).

Two other small-cap businesses -- Krishibid Seed and Annex Suites -- had as well taken initiatives to improve capital through SME system.

The official of the MTB Capital, the issue manager, said Krishibid Seed submitted its IPO proposal to be listed with the SME boards of both the bourses.

As per the agreement signed with issue supervisor, Krishibid Seed, an exclusive limited enterprise of Krishibid Group, might raise a capital worthy of Tk 150 million by offloading 15 million normal shares at an offer price of Tk 10 each beneath the fixed price method.

The country's premier bourse introduced the V-Next online platform in May 2019 for the SMEs who are seeking foreign investors.

The platform was introduced through a mega programme targeting the foreign investors interested to invest in local SMEs.

Earlier, the Dhaka Stock Exchange (DSE) said some 10 small-cap corporations are in the pipeline to get listed in the DSE's SME platform.

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