IPO Draft Proposes 20% Share Allocation for Mutual Funds

Staff Reporter | PNN

The capital market regulator, Bangladesh Securities and Exchange Commission (BSEC), has proposed a significant share allocation for mutual funds in initial public offerings (IPOs). The draft IPO rules state that 20% of shares in approved companies’ fixed or book-building IPOs will be reserved for mutual funds.

The BSEC stated that the allocation aims to protect the interests of ordinary investors. BSEC Director and spokesperson Abul Kalam said, “Unit-holders of mutual funds are mainly ordinary investors, so they will benefit from this allocation.”

The draft rules, titled Public Offer of Equity Securities (2025), published on October 30, will remain open for public comment until November 15. Based on feedback, necessary revisions will be made before final approval and gazette publication.

For the first time, the draft also allows legally residing Bangladeshis abroad and foreign citizens to apply for IPOs, with a proposed 5% share allocation. Applications must be made via a NITA account.

Additionally, 5% of shares are proposed for high-net-worth investors who report an income of BDT 20 million or more in tax returns. Investors listed in the Stock Exchange’s Electronic Submission System (ESS) also qualify in this category.

The proposed IPO rules aim to broaden investment opportunities, particularly encouraging participation from mutual funds, foreign investors, and wealthy individuals.