IDLC Investments navigates market slump with strategic diversification

While many traditional merchant banks have struggled during the prolonged bearish spell in the capital market, IDLC Investments Ltd has remained profitable, leveraging a well-crafted strategy focused on business diversification beyond traditional merchant banking.

In an interview with The Business Standard, Abul Ahsan Ahmed, chief operating officer of IDLC Investments, attributed the company’s resilience to its early decision to move away from an overreliance on issue management and portfolio investment.

“In the beginning, we focused primarily on portfolio and issue management, with a large number of margin loan accounts. The prolonged market slump after the crash impacted us significantly,” he said. “That experience taught us a valuable lesson, pushing us to diversify our business model.”

He noted that IDLC successfully managed its stressed margin loan portfolio, keeping it within a comfort zone with a strict monitoring policy.

Since then, IDLC Investments has expanded its footprint into key areas such as mergers and acquisitions advisory, debt syndication, structured finance, bond issuance, financial advisory services, and foreign investment advisory management.

“There are always cycles in the market — good times and bad. When a downturn persists, you simply cannot rely on portfolio and issue management alone,” he said.

Ahsan emphasised that IDLC’s operations are rooted in strict regulatory compliance and ethical business practices.

“Over the years, we have broadened our business scope while cultivating a distinct and transparent reputation in the industry. We believe unethical practices might deliver short-term gains, but they are never sustainable over time.”

To date, IDLC Investments has facilitated capital raising of Tk14,497 crore through IPOs, rights issues, bonds, and syndications — the highest among all merchant banks in the country. It also provides trustee services for funds totalling Tk2,847 crore.

“Many leading multinational and local companies have come to the capital market through IDLC Investments, significantly enriching the ecosystem,” he said, citing notable clients such as Robi, RAK Ceramics, Marico Bangladesh, Berger Paints, Mir Akhter, Matin Spinning, and Bank Asia.

“Investors have earned strong returns from these companies, as reflected in their stock performance.”

“Our commitment to ethics also shapes the business we take on. We only support IPOs of companies that demonstrate solid corporate governance. And in the secondary market, we do not issue margin loans indiscriminately — only to carefully vetted clients,” he said.

Ahsan stressed that IDLC is proof that consistent profitability is possible while strictly adhering to governance, regulations, and ethics. 

“While many others are struggling or cutting costs in this prolonged bear market, we have been able to continue operating with confidence.”

IDLC’s disciplined approach has earned it six prestigious awards — three from Euromoney and three from FinanceAsia — as the “Best Investment Bank in Bangladesh.”

He also underscored that no single institution can build the capital market alone. “It takes a collective effort. When competing merchant banks perform well, it ultimately strengthens the entire industry.”

To investors, he offered a word of caution, saying, “Margin loans might help in short-term trading, but they’re never a viable strategy for long-term investment. A prudent investor should never remain stuck with interest burdens for years.”

“We always tell our clients the stock market carries inherent risks. Gains are possible, but so are losses. That is why we encourage balanced, diversified portfolios.”

IDLC’s investment strategy reflects that philosophy. “We maintain a diversified portfolio — combining long-term investments, short-term equity exposure, and allocations in government bonds within our fixed income segment. The stable returns from those bonds have helped keep our overall portfolio profitable,” he concluded.