IPO APPROVAL & LISTING PROCESS OF BANGLADESH CAPITAL MARKET

Abstract

At some points of the business operation, each company has to raise the money. To do this, businesses can either borrow or issue shares, common or preferred. When a company raises fund through issuance of stock for the first time, it is known as Initial Public Offering (IPO). My internship report on "IPO Approval & Listing Process from the Perspective of the Bangladesh Capital Market". The IPO approval process starts with the submission of application to Bangladesh Securities and Exchange (BSEC). For helping the company issuing the common stock (known as issuing firm), the issuing firm appoints an issue manager from the list approved by BSEC. There are two methods in IPO process. One is fixed price method and the other is book building method. In fixed pricing method, the shares are offered at par value. If the issuing firm wants to issue shares at a premium, it has to follow the book building process. In book building method, the price of the share are determined following a road show. In the road show, the prospectus of the issue is sent to all eligible investors for submission of price of the impending issue. From the prices submitted by eligible investors, the IPO priced is fixed. After getting the approval of the BSEC, the issuing firm has to invite subscription from the public. This is done through publication of prospectus in at least two national newspapers. Interested investors are asked to submit their subscription through their brokerage houses within the subscription period. The issue is oversubscribed, lottery is conducted to determine who, among the subscribers, will get the shares and who would not. If the issue is undersubscribed, the underwriters would take up the unsubscribed portion of the issue. The IPO ends after the allocation of the shares to the winning subscribers. Then the listed process starts. The shares that are brought through IPO process, must be listed in at least one of the two stock exchanges – the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). The listing is listed for the IPO shares to be traded in the stock exchange. There are certain processes to be followed to list the security. Both the IPO and listing processes are discussed in detail in this report.