Small investors in Bangladesh’s capital market have faced significant losses due to the poor performance of companies listed through Initial Public Offerings (IPOs) in recent years. Weak financial health and allegations of share manipulation have compounded investor frustrations, with experts criticising the regulatory body for approving such companies.
In 2024, four companies-Best Holdings, NRB Bank Limited, Asiatic Laboratories, and Techno Drugs-raised Tk 645 crore through IPOs. Similarly, in 2023, three companies-Midland Bank, Trust Islami Life Insurance, and Sikder Insurance-along with a mutual fund, Capitec Grameen Bank Growth Fund, raised Tk 202 crore.
Despite expectations of returns, most of these companies saw sharp declines in their share prices, leaving investors at a loss. Out of the eight companies and one mutual fund listed in 2023 and 2024, six experienced significant price drops, making it difficult for investors to recover their capital, let alone earn profits.
The following are the six-month (July-December) share price changes for some of the listed companies: Trust Islami Life Insurance: Decreased by Tk 19.40 (37.74%), Asiatic Laboratories: Decreased by Tk 17.20 (32.33%), Best Holdings: Decreased by Tk 14.60 (44.51%), Techno Drugs: Decreased by Tk 27.60 (43.46%), Sikder Insurance: Decreased by Tk 8.60 (28.95%), Capitec Grameen Bank Growth Fund: Decreased by Tk 3.80 (30.64%). However, Midland Bank and NRB Bank bucked the trend with share price increases of 46.47% and 13.22%, respectively.
The instability in Bangladesh’s capital market over the past few years has left small investors struggling with significant losses. Declining earnings per share (EPS), poor financial performance of newly listed companies, and allegations of share manipulation have eroded confidence, forcing many investors to exit the market.
Sohag Bhuiyan, a small investor, expressed his frustration, stating, “Rumours and share manipulation through social media have created panic among investors like me. I’ve suffered losses multiple times over the last two years and eventually left the market.” He added that IPOs have offered little profit, with the financial health of many newly listed companies deteriorating further.
The financial performance of companies listed through IPOs in recent years has been disappointing. In the July-September 2024 quarter,
the EPS of seven companies declined, and Capitec Grameen Mutual Fund reported losses. Cash flow also decreased in several companies during this period: Midland Bank: EPS fell from 22 paisa to 9 paisa, with cash flow down to 22 paisa from 31 paisa.
Asiatic Laboratories: EPS dropped 74% to 24 paisa, while cash flow turned negative, Best Holdings: EPS decreased from 37 paisa to 1 paisa, and cash flow fell to 22 paisa, Techno Drugs: EPS dropped to 63 paisa from Tk 1.09, with cash flow falling to 23 paisa, and NRB Bank: Consolidated EPS declined by 74 paisa. While most companies saw declining performance, Trust Islami Life Insurance and Sikder Insurance reported slight EPS increases of six paisa and five paisa, respectively.
Concerns over the misuse of IPO funds have prompted regulatory scrutiny. The Bangladesh Securities and Exchange Commission (BSEC) has launched investigations into Best Holdings and Asiatic Laboratories. A three-member committee is reviewing Asiatic Laboratories’ financial reports and fund utilization, with a report expected soon. BSEC spokesperson Rezaul Karim stated, “Appropriate action will be taken if irregularities are found.”
Political and economic instability has further compounded the challenges. According to the Central Depository Bangladesh Limited (CDBL), the number of investors in the capital market dropped by 91,643 in 2024, from 17,56,440 to 16,64,797.
Experts and analysts have called for stricter regulatory oversight to prevent share manipulation and ensure the financial stability of companies entering the capital market. Without these measures, the trust of small investors may remain elusive, further weakening the market.
Professor Abu Ahmed, Chairman of the Investment Corporation of Bangladesh (ICB), criticised the IPOs, stating that these companies were not intended to benefit investors but rather to enable stock speculators to profit.
“The regulatory body bears responsibility for approving such companies,” he added. He urged investors to exercise caution and avoid companies with questionable financials. The losses have been particularly severe for those who invested using margin loans, amplifying their financial distress.
The poor performance of IPOs in recent years has highlighted the need for stricter regulatory oversight and greater transparency. Experts argue that approving financially weak companies undermines investor confidence and the overall health of the capital market.
