Bangladesh’s CFOs are leaving a fortune on the table

Ask any chief financial officer in Dhaka how his or her company funds its growth and you will hear the same answer the country has been giving for 30 years: the bank loan, the term facility, the working capital line, the syndicated arrangement renewed every year at a rate that moves with the central bank and a relationship that rests on collateral and personal trust rather than on the strength of the business.

Almost nobody will mention the one source of capital that the most successful companies in this country actually used to become what they are today, and that is the public equity market. 

Corporate Bangladesh does not avoid the Dhaka Stock Exchange (DSE) because the arithmetic fails, it avoids it out of habit, out of suspicion, and out of a set of fears that deserve to be examined honestly.

Owners worry about losing control of a company they built, they are uneasy about opening their books to regulators and minority shareholders and the financial press. They have watched the index swing violently enough to decide that the market is a casino rather than a source of capital. And many simply do not understand listing well enough to weigh it against the loan they already know. 

None of this is peculiar to Dhaka. The instinct to stay private and hold on to control is the default instinct of family-controlled firms in every frontier and emerging market, and so is the quieter truth sitting behind it, which is that a family that controls both the boardroom and the share register has little reason to court outside investors and sometimes a positive reason to keep the information environment murky.

On the DSE, that instinct has hardened into a specific and damaging pathology, which is the compliance listing. Far too many of the companies that have come to market did so not to raise real capital but to satisfy a lender, a regulator, or a tax incentive, floating a token sliver of shares while the controlling family kept the overwhelming majority and never intended to surrender a thing. The result is a market of thin free floats, shallow institutional ownership, and prices discovered by retail sentiment rather than by the patient money of funds whose job is to value a business properly. 

And here is the part the cautious CFO misses entirely, because the very volatility he cites as his reason for staying away is not an argument against listing, it is a symptom of bad listing, manufactured by the thin floats and absent institutions that genuine, committed listings would cure. The disease and the cure are the same fact seen from opposite ends. 

A market dominated by real floats and serious institutional owners is a calmer and deeper market, and the only way to build one is for good companies to stop treating the exchange as a box to be ticked and start treating it as a place to raise capital.

None of this would persist if the bank loan were not so easy. 

The reason the compliance listing endures, and the reason real equity raising is rare, is that cheap, relationship-based bank credit has for years been available to any established firm with collateral and a recognised name, which quietly removed the incentive to do the harder work of going to the market for capital. 

But the easy loan is not the free lunch it appears to be, and it costs far more than CFOs admit. 

A company that funds itself almost entirely through bank debt is a company whose cost of capital is set by its lender rather than by the market, whose growth is capped by the collateral it can pledge, whose balance sheet carries a permanent refinancing risk that has nothing to do with the quality of its earnings, and whose owner has handed the bank an informational monopoly that lets the lender price the relationship to its own advantage rather than the borrower's. 

An economy built on this single model concentrates risk inside the banking system, starves good companies of patient long-term capital, and leaves the savings of ordinary citizens trapped in low-yield deposits instead of invested in the growth of the country's best firms.

So how does a proper listing actually help, beyond the obvious fact that it raises money? 

The most useful lesson from how this has played out in more developed markets, and one any seasoned finance chief will recognise the moment it is spelled out, is that the equity raised at listing tends to be used less to chase new investment than to pay down debt and rebalance the balance sheet, and that going public is typically followed by a fall in the cost of whatever bank credit the firm continues to use, partly because a listed company produces public, audited, credible information and partly because a firm with a live alternative source of funds negotiates with its banks from strength rather than dependence.

That point inverts the usual objection, so read it twice if you run finance for an unlisted firm.

Listing does not merely hand you equity, it makes your remaining debt cheaper, it breaks the hold your lender has over you, and it turns a relationship of dependence into one of choice.

The benefits compound from there. 

A listed share is a currency you can use to acquire competitors and to retain the executives a rival could otherwise poach, and when public-company finance chiefs are asked what they value most about being listed, it is precisely this acquisition and retention currency that comes first. 

A market valuation, visible and liquid and refreshed every trading day, replaces the polite fiction that a private company is worth whatever its owner imagines, and it gives founders a clean way to take money off the table and solve their own succession without selling the business. 

As for the fear of losing control, it rests on a misunderstanding, because nothing about listing requires you to surrender the company, since you can float a meaningful minority, raise serious capital, crystallise a real valuation for the rest, and run the firm exactly as you did the day before, while the disclosure that owners instinctively dread is the very thing that lowers borrowing spreads, attracts better counterparties, and turns audited numbers into trusted ones. 

Transparency is not the price of listing, it is one of its products, and it is worth far more than it costs.

Transparency also happens to be the gate to the largest pool of capital this country has never properly tapped, which is foreign institutional money, because the pattern across emerging markets is blunt, foreign investors systematically hold fewer shares in opaque, family-controlled firms in places with weak disclosure, and they reward the firms and the markets willing to meet them halfway. 

A company that lists with a real float, reports cleanly, and governs itself credibly is a company that a fund in Hong Kong or London or Singapore can actually own, and this is not a hypothetical, because that money has started to look hard at Bangladesh.

Consider what the people who allocate frontier capital for a living are saying about this market now. Hong Kong's Asia Frontier Capital, which invests across the region's frontier markets, has publicly forecast a turnaround for Bangladesh, pointing to a stabilising macroeconomy, falling inflation that should pull benchmark interest rates down, and the prospect of greater political clarity ahead, and its fund manager has described Bangladesh as sitting today roughly where Sri Lanka and Pakistan sat 18 to 24 months ago, with the overall market priced at around 9.5 times earnings against the 16 to 17 it commanded six or seven years back. 

Independent frontier-market commentators have put it more starkly still, observing that Bangladesh has nearly closed the gap with India on income per head while the market value of its banks relative to the size of the economy remains a small fraction of India's, and drawing the obvious conclusion that the time to position in a market is before the improvement is fully priced rather than after.

The comparison to Sri Lanka and Pakistan is not rhetorical, because both countries ran the exact sequence Bangladesh is now entering and both rewarded the investors and the issuers who moved early. 

Pakistan's benchmark index rose roughly 86% in 2024, its best year in more than two decades, as an external stabilisation program anchored confidence, inflation collapsed from nearly 30% to low single digits, the central bank cut rates hard, the currency steadied, and foreign money returned to a market trading at a single-digit earnings multiple, and it then added another 47% the following year. 

Sri Lanka ran the same play, its main index gaining roughly half its value in a single year and a third again the year after, on the back of stabilisation, debt restructuring, collapsing inflation, falling rates, a steadier currency, and returning foreign inflows, producing what every analyst openly called a re-rating of the entire market. 

These are not exotic outcomes, they are simply what happens when a cheap frontier market stabilises and the capital that was waiting on the sidelines comes back, and the companies that were already listed captured the re-rating while the companies that waited watched it from outside.

This is the part that should concentrate a CFO's mind. 

A re-rating rewards the companies that are already inside the market when it arrives, because they are the names in the index, in the institutional portfolios, and on the screens of the regional allocators at the moment the money moves, and the firm that lists into a rising market lists on better terms, at a higher valuation, and into deeper demand than the firm that waits until the easy gains are gone and the field is crowded. 

Listing is a position you take ahead of the re-rating, not a reaction to it, and the early signs of that turn are already visible. The companies in this country that listed a generation ago and used public capital to grow into household names did not do so because the market was already booming, they did so because they grasped that permanent capital, a public valuation, and access to outside investors were worth more than the comfort of the bank loan, and the next generation of national champions will be drawn from the firms that reach the same conclusion now rather than later.

The conditions have rarely been so well aligned. 

The macro backdrop is turning, foreign allocators are circling, valuations are cheap by any honest measure, and the capital market regulator has just been placed in the hands of a leadership that understands corporate finance from the inside and has made rebuilding confidence its explicit priority. 

That last fact is welcome, and the icing on the proverbial cake. The case for listing does not rest on who runs the commission, it rests on the arithmetic of capital, on the evidence from every comparable market in the region, and on the plain fact that the most expensive habit in corporate Bangladesh is its quiet, comfortable, costly dependence on the bank loan. 

The question for every CFO reading this is no longer whether the market will re-rate, it is whether your company intends to be inside it or outside it when it does.

Sketch: TBS

Sajid Amit, PhD, is an experienced development professional, capital markets and macro advisor, with work experience in Morgan Stanley and BRAC EPL, and has been awarded investment research awards by Morgan Stanley and BlackRock UK. He can be reached at sh2367@caa.columbia.edu.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.