DSE's SME platform to attract big stock market players

Only investors with at least Tk50 lakh investment in the stock market can buy shares from Dhaka Stock Exchange’s upcoming SME platform.

Mohammad Rezaul Karim, executive director and spokesman for the Bangladesh Securities and Exchange Commission (BSEC) told Dhaka Tribune that companies that get permission will be able to raise funds by issuing shares through qualified investor offers (QIOs). 

However, not all investors can buy those shares. Investors willing to buy DSE SME shares should have a good portfolio in the stock market.

“Only those who have a minimum investment of Tk50 lakh in the stock market can invest in this platform also,” he said.

The trading activities of the SME platform will start on Thursday with six companies in the SME sector.

Asked about the delay in launching the SME platform in DSE while it was already launched in Chittagong Stock Exchange (CSE) on June 10, Mohammad Rezaul Karim said: “The delay was due to the company listing and making the SME platforms transparent.”

Although late, DSE Director Shakil Rizvi thinks that the country's SME industries will benefit through this platform of DSE. 

He said: “The idea behind the SME platform is to give small and medium industries the opportunity to raise money from the stock market. It is already doing very well in India and China.” 

“In India and China, many companies have been able to transform themselves into giant companies with the help of the SME platforms. Even here in our country, those who are not getting a big loan from the bank can use it in a good way. But since it is new, surveillance is necessary.”

The former DSE president Rizvi thought the criterion of investors' ability to make a certain amount of money was part of the far-reaching thinking of BSEC.

“Entrepreneurs will raise money from this platform. So, the risk factor is much higher for investors here. If the organization runs well, it is possible to make as much profit as possible. However, if the organization fails or does not run well, the loss will also be greater,” he said.

“So, I think only those who have the ability to take the risk should invest. It is a good idea to keep small investors away,” he added.

According to BSEC, of the six companies, two are newly listed firms that raised funds through qualified investor offer (QIO) while four others came from the recently abolished over-the-counter (OTC) market.

The two new companies — Master Feed Agrotec and Oryza Agro Industries — recently raised funds worth Tk10 crore each.

Four firms that came from the recently abolished OTC market are Bengal Biscuits, Apex Weaving and Finishing Mills, Wonderland Toys and Himadri Ltd. 

Initially, these six companies' shares will be traded on the DSE-SME platform and the number of companies will gradually rise as many SMEs are in the queue to raise funds through QIO. 

According to a BSEC notification: 

1. Only Qualified Investors registered under the Electronic Subscription System are allowed to participate under the DSE SME Platform. If any investor other than qualified Investors has shares of companies trading under the DSE SME Platform, he has the only option to sell the shares.
2. There shall not be any category in the DSE SME Platform. However, for identification and other related matters, issuers under the SME Platform may be treated as "S" as an Indicator.
3. For settlement of trades, provisions for "A" category securities under Main Board shall be applicable for the DSE SME Platform.
4. Money adjusted facilities (netting) shall be applicable among the securities under Main Board and DSE SME Platform excluding "Z" categories under Main Board.
5. All the shares trading under the DSE SME Platform shall be considered as marginal securities.
6. Other relevant matters (i.e. transaction fees, AIT) shall be the same as the Main Board of DSE.

On April 30, 2019, Finance Minister AHM Mustafa Kamal inaugurated the small-cap companies' board. 

Trading at the CSE-SME Platform started on June 10 this year. Nialco Alloys, which raised Tk7.5 crore through qualified investors offer, was the country's first SME to be listed on the stock market.