The company has applied to the stock market regulator, seeking the cancellation of its IPO
A securities regulator has directed both stock exchanges of the country to hold onto the money of the recently-held Delta Hospitals bidding.
The Bangladesh Securities and Exchange Commission (BSEC) has taken this decision in the wake of a letter regarding the cancellation of the company's initial public offering (IPO) application.
The commission, yesterday, issued letters to the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) in this regard.
The stock exchanges will have to hold the money of institutional and qualified investors until further notice.
The company authorities decided to withdraw the IPO as they did not get the desired response to their shares in the book building method.
The decision was taken at the 208th meeting of the company's board of directors on June 1. After that, the company applied to the commission on June 2.
Asked about the reason for the application to cancel the IPO, company secretary Al Mamun told The Business Standard, "The company directors would have to offload more shares due to the low premium in the book building method. As a result, seven of the company's total 10 shareholder directors would have to lose their positions for not having minimum shares after the IPO."
"Moreover, the income of the hospital has declined considerably due to the Covid -19 pandemic. In such a situation, investors would suffer after the IPO," he added.
He said, "We have sent a letter to the BSEC as well as two stock exchanges. In this situation, we do not want to come to the market now."
Meanwhile, sources at the BSEC said according to the law, there is no scope of withdrawing the IPO after the participation of investors. However, since the company has applied, the commission will now consider the matter.
However, there is no scope to give a waiver to the legal complications that have already arisen.
It is learned that the commission will now decide on accepting the application made by the company.
The cut-off price of Delta Hospital Ltd shares has been determined at Tk11 through electronic bidding.
Qualified and institutional investors were supposed to buy 50 percent of the company's shares – worth nearly Tk31.54 crore – at the cut-off price.
The electronic bidding, under the book building method of the IPO, took place for 72 hours – from 5pm on April 5 to 5pm on April 7.
During this period, 88 institutional and eligible investors offered different prices to buy the company's shares.
The highest bidding price was Tk46 and the lowest was Tk11. The cumulative value of the total bidding was over Tk32.40 crore.
The company's cut-off price was supposed to be declared two months ago. However, the schedule was changed due to the declaration of government holidays.
Earlier, the BSEC allowed Delta Hospital to explore the cut-off price of its shares through electronic bidding. The company set a target to raise Tk50 crore through an IPO.
The company will utilise Tk31.09 crore to procure equipment, Tk16.66 crore to repay bank loans and Tk2.25 crore to meet the IPO expenses.
The company is engaged in general medical treatment plus in cancer diagnosis, treatment and management in Bangladesh's private sector.
In the 2018-19 financial year, it had revenue of Tk65.33 crore.
Prime Finance Capital Management Ltd is the issue manager for the company while ICB Capital Management Ltd is the registrar to the issue.
The company started off in 1989 as Delta Medical Centre. In 2007, the company changed its name to Delta Hospital Ltd.
The hospital has two units, one in Mirpur and another in Uttara, Dhaka.
The proposed project envisages setting-up a modern specialised hospital with a capacity of 150 beds. The initial cost of the proposed hospital project has been estimated at Tk185.22 crore.