Three apparel companies have entered market with an initial public offering (IPO) seeking funds to increase their production capacity and sales network in 2012. Lower cost of fund and growing global presence of the sector have been mentioned by the analysts as reasons of the rising trend.
Around 40 more IPO proposals have been submitted to the Bangladesh Securities Exchange Commission (BSEC), of which 10 are textile companies namely – Keya Cotton Mills, Far East Knitting and Dyeing, Hamid Fabrics, MP Spinning Mills, Keya Spinning Mills, Dragon Sweater and Spinning, Fibre Shine, Royal Denim, Shasha Denims and Aman Cotton Fibrous.
Tung Hai Knitting and Dyeing Ltd. is the latest textile company receiving BSEC approval and waiting to open its subscription soon. The proceeds from its IPO will be spent to expand its production and financial capacities buying more machinery and strengthening capital base, among others. There are more textile companies waiting to make debut in the bourses, which include Matin Spinning Mills, Mozaffar Hossain Spinning Mills and Hwa Well Textiles (BD).
Most of IPO proposals were made two years ago when bank interest rate was much higher than at present, and the companies opted for the cheapest way of having funds offered by the stock market. The IPO proposals influx is due to the increase of textile companies.
Of total 257 listed companies presently, the textile sector firms are 32. The number is the 3rd largest of companies coming from a single sector. The textile companies are the 10th in terms of market capitalisation. As of February this year, the textile companies’ market cap stood at about Tk. 950 crore, which was 4% more than the previous session.
