Institutional investors will bid to set a reference price for Baraka Patenga shares and later the general public will apply for the same at a 10% discount
The 72-hour bidding to fix the share price for an initial public offering (IPO) of Baraka Patenga Power Limited will begin on 15 February.
The bidding – a requirement for going public under the book-building method – is due to take place between 5pm on 15 February and 5pm on 18 February at the Dhaka Stock Exchange, said sources.
According to the book-building process rules, institutional investors will bid to set a reference price for Baraka Patenga shares and later the general public will apply for the same at a 10% discount.
Previously, on 5 January, Baraka Patenga received approval from the Bangladesh Securities and Exchange Commission (BSEC) to explore the price.
The company wants to raise Tk225 crore through the IPO.
The company will invest part of its IPO proceeds of Tk144.34 crore in two of its power generation subsidiaries – Karnaphuli Power Ltd and Baraka Shikalbaha Power Ltd.
The rest of the funds will be used to repay loans and bear the expenses of the IPO process, the BSEC said in a statement.
LankaBangla Investments Ltd, a leading local merchant bank, is the issue manager of Baraka Patenga's IPO.
The BSEC also decided that the company cannot further increase its paid-up capital by issuing bonus shares within the next five years. Also, the company must hold at least 51% of the shares of its two subsidiaries, according to the securities regulator.
At the end of fiscal year 2019-2020, Baraka Patenga's net asset value (NAV) per share stood at Tk23, without a revaluation surplus. The company's NAV per share is Tk20.98, excluding that of its subsidiaries.
In the last fiscal year, the company's consolidated earnings per share (EPS) was Tk4.37, which was Tk1.84 on a solo basis. The five-year weighted average of the company's consolidated EPS was Tk3.30, which was Tk2.82, if profits of subsidiaries were excluded.
Baraka Group, mainly a venture of non-resident Bangladeshis, began its journey in the mid-2000s to develop a modern residential area in Sylhet.
The group entered the power generation business more than a decade ago and its first power venture – Sylhet Barakatullah Electrodynamics, now Baraka Power Limited – was listed on both bourses.
The group also expanded into apparel exports, and collaborated with world-renowned technical partners and financiers – such as the World Bank Group's International Finance Corporation – which helped the group grow further in the sector of power generation.
Baraka Patenga Power owns a 50MW power plant – located in Patenga, Chattogram – which started a commercial run in May 2014. Baraka Power owns 51% shares of Baraka Patenga.
Now Baraka Patenga is working to strengthen its subsidiaries, both of which are already in operation but are still waiting to get their equity structures improved for the sake of availing necessary loans.
Baraka Shikalbaha, a 105MW heavy fuel oil-based power plant, came into production in May 2019, while Karnaphuli Power, a 110 MW plant, started generating power in August.