A gap of Tk450 between the highest bid and the cut-off price indicates that bidders had poorly analysed the market
The cut-off price of Walton Hi-Tech Industries' shares has been determined at Tk315 through electronic bidding.
Qualified and institutional investors will buy 50 percent of the company's shares – worth nearly Tk61 crore – at the cut-off price.
Meanwhile, individual investors will be able to purchase the rest of the shares worth more than Tk39 crore at Tk283 per share, after a 10 percent discount on the cut-off price.
The electronic bidding, under the book building method of the Initial Public Offering (IPO), took place for 72 hours – from 5pm on March 2 to 5pm on March 5.
During this period, 233 institutional and eligible investors offered different prices to buy the company's shares. Among them, most bid at Tk210 and Tk150.
The highest bidding price was Tk765 and the lowest was Tk12. The cumulative value of the total bidding was over Tk186 crore.
However, there was a large gap between the highest bid and the cut-off price.
Obaidur Rahman, managing director of AAA Finance and Investment – the issue manager of Walton's shares, told The Business Standard that they observed a gap of Tk450 between the highest and the cut-off prices.
"This denotes that the bidders had poorly analysed the market and thus had insufficient knowledge in this respect," he said.
The gap would have been lower had they done proper analysis before the bidding, he added.
Earlier, the Bangladesh Securities and Exchange Commission allowed Walton to explore the cut-off price of its shares through electronic bidding. The company set a target to raise Tk100 crore through an IPO.
Walton Hi-Tech will use the proceeds to expand its businesses, repay bank loans and meet IPO costs.
Walton has paid-up capital of Tk300 crore. In the 2018-19 accounting year, the company's total revenue stood at Tk5,177 crore and net profit at Tk1,376 crore.
In the last financial year, the company's earnings per share was Tk45.87.
Additionally, the company's net asset value, per share with revaluation, was Tk243.16 – without revaluation it was Tk138.53 during the last financial year.
Walton Hi-Tech, founded in 1977, began manufacturing refrigerators, freezers, air-conditioners and compressors in early 2008.
The company then branched out into television as well as home and electrical appliances.
It now has a workforce of more than 20,000 people in 22 production bases on 764 acres of factory area.
The company's yearly production capacity is 10 million units – based on market demand.