An alternative financing window for the country's thriving small and medium enterprises opened on Thursday, with the Dhaka Stock Exchange (DSE) ringing the bell to onboard six small-cap companies into its new platform – Small Capital Companies' Platform, popularly called SME or small-cap platform.
With the SME board fully functional, the capital market of Bangladesh is set to reach a new level, said DSE Managing Director Tarique Amin Bhuiyan.
Over one lakh SME companies are registered with the country's company registrar and they can opt for the stock market listing through the DSE SME platform, he added.
Bangladesh Securities and Exchange Commission's (BSEC) Commissioner Dr Mizanur Rahman said, of the registered SME companies, most are making profits.
Speaking as chief guest, Dr Mizanur Rahman said the firms borrow from multiple inconvenient sources to run their business, while the SME platforms of the bourses offer them equity alongside borrowing opportunities through debt instruments.
"SME board listing would also help improve small firms' operational efficiency, accounting practices, and good governance alongside providing them with the needed money," Dr Mizanur added.
Four of the previously listed small-cap firms – Apex Weaving and Finishing Mills, Bengal Biscuits, Himadri Ltd, and Wonderland Toys – which were ousted to the over-the-counter (OTC) market a decade ago, have been accommodated on the SME platform.
Two new companies Master feed Agrotec and Oryza Agro Industries joined following their recent capital raising from the emerging platform of the capital market.
Inspired by the SME listing success stories in the bourses of China, India, and many other countries, Bangladesh's capital market regulator, a few years back, took an initiative to have a separate market from where SME companies can raise equity to avert debt burdens and also let their shares to be traded on screen.
China has listed over a thousand SME firms on its Shenzhen Stock Exchange and announced to open a separate stock exchange in their capital only for the SME companies with a special focus on technology.
India's Bombay and National Stock Exchanges together helped over two hundred small-cap companies raise capital and let shares be traded on the bourses.
Chittagong Stock Exchange (CSE) rang the bell for its first SME company Nialco Alloys on 10 June this year and the DSE SME firms except Himadri Limited began trading on the port-city bourse on Thursday.
Unlike the main trading boards, the SME platforms are dedicated to qualified investors which include only registered eligible institutional investors and individuals having at least Tk50 lakh invested in the stock market.
Retail investors are allowed to only sell in the SME boards as the market tends to be more volatile because of the low-cap nature and a comparatively wider range of daily price deviation allowed.
DSE Chairman Md Eunusur Rahman, DSE Director and SME Foundation Chairman Dr Md Masudur Rahman along with the entrepreneurs of the onboarding firms were present at the ceremony.
M Shaifur Rahman Mazumdar, chief operating officer of DSE, elaborated on the SME firms' way to the new platform and what they need to comply with after listing.
A firm must grow its paid-up capital to at least Tk5 crore after raising money from the SME platform and it cannot cross Tk30 crore.
As soon as a listed SME firm grows bigger than the threshold, it must apply to shift to the main market.
The regulations, compliances and cost of listing, everything is offering a breathing space to the SME firms to welcome them on board.
The six firms on the debut session did not see any seller for their stocks on Thursday.