21 merchant banks asked to explain failure to manage any IPO in 2yrs

The Bangladesh Securities and Exchange Commission has issued show-cause notices to 21 merchant banks for their failure in managing any initial public offering in two calendar years, officials of the commission said.
‘A BSEC initiative is underway to bring merchant banks under book for non-management of any public issue in two years,’ BSEC executive director Saifur Rahman told New Age.
‘The entities which are yet to manage any IPO will face regulatory measures,’ he said.
In 2015, the commission had warned two entities for such non-compliance, the BSEC official said.
According to the Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rules, 1996, under the registration certificate conditions, a merchant bank must furnish at least one issue to the commission in two calendar years for bringing it to the capital market.
BSEC officials told New Age that the commission, based on its finding, asked 21 merchant banks to explain their position regarding the rules violation in seven working days.
The merchant banks are: Agrani Equity and Investment, AIBL Capital Management, Alliance Financial Services, BD Finance Capital Holdings, BLI Capital, BRAC EPL Investments, City Bank Capital Resources, Cosmopolitan Finance, EBL Investments, EC Securities, EXIM Islami Investment, FAS Capital Management, First Security Islami Capital and Investment, Jamuna Bank Capital Management, NBL Capital and Equity Management, NDB Capital, Race Portfolio and Issue Management, Rupali Investment, SBL Capital Management, UniCap Investments and Uttara Finance and Investment.
A BSEC official said that the commission took the move as fund raising by businesses witnessed a sharp decline in the just concluded fiscal year. Sluggish market situation was among the reasons for the issuer companies’ reluctance in floating shares, he said.
A DSE report showed that fund raising from the capital market through IPOs declined by 34.33 per cent, or Tk 448 crore, in the fiscal year 2015-16 compared with that in the previous fiscal year.
As per the statistics, 11 companies raised Tk 858.30 crore through IPOs in FY16 while 16 companies had collected Tk 1,306.97 crore from the market under the same process in FY15.
The commission last week also issued show-cause notices to 14 merchant banks for non-submission of monthly reports in violation of a BSEC instruction. The commission earlier in 2011 had asked all the merchant banks to submit a report on their activities.
The commission had taken the initiative to collect updated reports of the merchant banks with a view to verifying different information including issue management status, BSEC executive director Saifur Rahman had told New Age.
The letter had asked the entities to explain their position regarding non-submission of monthly reports.

News Courtesy: www.newagebd.net