Fund raising by companies through initial public offerings (IPOs) surged by 39 per cent in the outgoing fiscal year (FY) compared to the previous fiscal.
Nine companies and two mutual funds (MF) raised an aggregate amount of Tk 5.41 billion (541 crore) through IPOs in FY 2017-18, according to data available from the Dhaka Stock Exchange (DSE).
In FY 2016-17, six companies and three mutual funds collected Tk 3.90 billion, the DSE data shows.
Fund raising by companies through IPOs was slow in FY 2016-17 mainly due to the revised Public Issue Rules-2015.
The rules compelled many issuer companies to revise their IPO proposals, brokers said.
Three of the nine companies in the outgoing fiscal raised their funds applying the book building method.
The Aamra Networks raised Tk 562.5 million in capital, Bashundhara Paper Mills Tk 2.0 billion and Aman Cotton Fibrous Tk 800 million.
Six companies raised funds using the fixed price method.
The Oimex Electrode raised Tk 150 million, Nahee Aluminum Composite Panel Tk 150 million, Queen South Textile Mills Tk 150 million, Advent Pharma Tk 200 million, Intraco Refueling Station Tk 200 million and SK Trims & Industries Tk 300 million.
ICB AMCL First Agrani Bank Mutual Fund raised Tk 500 million while CAPM IBBL Islamic Mutual Fund collected Tk 300 million in FY 2017-18.
Most of the funds have been raised for business expansion, repayment of loans and meeting the working capital requirements.
Market insiders attributed the revival of the IPO market to poor performance of the secondary market and the IPO quota for affected small investors.
DSEX, the prime index of DSE, lost 251 points or 4.44 per cent to close at 5,405 on Thursday, the last trading day of the outgoing fiscal.
The daily turnover, another important gauge, fell to Tk 6.46 billion on an average in FY 2017-18, down by 14.43 per cent over the previous fiscal.
"The performance of the primary market is relatively good as newly-listed companies' share prices soared manifold on their debut trading days, which encouraged investors to get at least one IPO lot to book short-term profit," said a leading broker.
He noted that as there is no risk in the primary market, the investors showed more interest in it.
The primary market remained vibrant in the outgoing fiscal with the IPOs of a number of companies being oversubscribed, he said.