AHSAN HABIB

The stock market has almost closed the books on the fiscal year (FY) 2024-25 without a single company getting listed through an initial public offering (IPO), a rare event not seen in decades.

Market analysts have linked the absence of IPOs to the bleak secondary market and what they describe as an unappealing valuation policy under the current public issue rules.

The last company to launch an IPO was Techno Drugs, whose subscription closed in June 2024, during the tenure of the previous commission led by Prof Shibli Rubayat Ul Islam.

The new commission, appointed following the political changeover in August last year, has yet to approve any IPOs over the past year.

Officials at the Dhaka Stock Exchange (DSE) said FY25 was the first IPO-less fiscal year since the 1990s.

While records before that are incomplete and not available, some senior DSE officials said the last time the market saw such a dry spell may have been in the 1970s, when trading was suspended for several years after the country’s independence in 1971.

In the absence of fresh listings and amid poor performance by many listed companies, investors have been leaving the market in large numbers. Around one lakh beneficiary owner (BO) accounts have been closed since June 2024, according to the Central Depository Bangladesh Ltd.

“The main reason for the lack of IPOs is the unattractive valuation method set out in the public issue rules,” said Rubayet-E-Ferdous, chief executive of Shanta Equity.

He added that while the previous commission had initiated efforts to reform the rules, progress stalled due to the August political changeover and a shift in leadership at the regulator. As a result, strong companies saw little incentive to seek listings.

“When the secondary market is weak, issuers are usually reluctant to join as they worry about failing to secure a good price,” he said. “But the shortage of IPOs has created a supply-side problem for the market.”

Over the past year, the DSEX, the benchmark index of the DSE, has lost 516 points, or about 10 percent, to stand at 4,717.

For nearly a year, the index hovered around the 5,200 mark, propped up by a floor price mechanism introduced by the previous commission to artificially support prices.