BSEC directs DSE, CSE to go public

Bangladesh Securities and Exchange Commission (BSEC) has instructed the country’s two stock exchanges to submit their IPO plans in conformity with the demutulisation guideline.

The Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) were directed to sell 35 percent of their stakes through the Initial Public Offering (IPO) within January 10 next year, according to a meeting held on Monday.

The meeting was called to review the progress of goals set in the Demutualisation Act 2013.

“The stock exchanges failed to achieve the main objectives of the demutualization scheme in the latest scheduled time, which expired in 2020,” BSEC Commissioner Shamsuddin Ahmed said.

“In the last eight years, the two-stock exchanges have also not been able to enjoy the benefits of the demutualisation. Even, there is no progress on the shares offload issue,” he said.

“We ordered them to submit their IPO plans as per the demutualisation scheme,” he said.

As per the Act, forty per cent of the stock exchanges’ shares must be credited to its member accounts and the remaining 60 per cent in a blocked account. Of the blocked account, the bourse will have to sell 25 per cent of its total issued shares to strategic shareholders and the remaining 35 per cent through an IPO.

DE Acting Managing Director M Shaifur Rahman Mazumdar said, “We will submit the IPO plan after the board meeting to be called soon.”

On May 14, 2018, the DSE struck a deal with the Chinese consortium of Shenzhen Stock Exchange (SZSE) and the Shanghai Stock Exchange (SSE) on selling 25 percent of its shares for Tk 947 crore. But the prime bourse’s performance left the strategic investors disappointed.

A DSE shareholder said the consortium was yet to make any contribution to the market development.

The CSE, the country’s second bourse, is not yet to find strategic partners to meet the regulatory requirement. It found no takers for its 25 percent stake despite trying for eight years.

A CSE director said the stock exchange has contacted several local and foreign institutions to become CSE’s strategic investors.

However, some of them have shown their interest, he said.

He blamed the Covid-19 for the delay in implementing the goals of the demutulisation scheme, he added.

As per the demutualization scheme 2013, the bourse has 13 members — seven independent directors, four shareholder directors, one strategic investor, and the bourse’s managing director.

After the stock market crash in 2010, stakeholders demanded that the government ensure monitoring to stop manipulation and bring transparency to the stock market, to restore the investors’ confidence. Following the demand, the Act was passed in the parliament.

DSE logged a profit of Tk 113.49 crore in fiscal 2020-21, a jump of 314.26 percent or 4.14 times over the previous fiscal year, according to the DSE’s latest audit report.

The profit reversed strongly from fiscal 2019-20 when its profit sank to its lowest in 13 years due to the pandemic that had brought trading on the bourse to a screeching halt. In FY20, it made Tk 27 crore in profit.

The bourse’s board of directors recommended a 4 per cent dividend for its shareholders in FY21. The DSE’s annual general meeting is scheduled for December 28.

In FY21, its earnings per share rose to Tk 0.63 from Tk 0.15 during the period. The total number of shares is more than 180.38 crore. It’s Paid-up capital of Tk 1,803 crore.

The CSE’s profit in fiscal 2019-20 sank to its lowest in four years thanks to the global coronavirus pandemic. It posted a profit of Tk 31 crore for the financial year that ended on June 30, 2020. The CSE’s revenue in fiscal 2019-20 stood at Tk 34 crore.