The electronic bidding process to determine the cut-off price of Walton Hi-Tech Industries' shares has begun.
The bidding began at 5pm today under the book building method of Initial Public Offering (IPO) and will continue for the next 72 hours.
During this period, institutional and eligible investors will offer prices to buy the company's shares.
Qualified and institutional investors will get the company's 50 percent shares at the cut-off price under the book building method.
Book building method is a process that enables an issuer to discover the price to offer for its security based on demand from institutional investors.
General investors will be able to apply to buy Walton's shares at a 10-percent discount on the cut-off price.
Earlier, the Bangladesh Securities and Exchange Commission (BSEC) allowed Walton to explore the cut-off price of its shares through electronic bidding. The company wants to raise Tk100 crore through IPO.
Of the amount, eligible institutional investors will bid to buy Walton's shares worth Tk50 crore, while shares worth Tk40 crore and Tk10 crore will be open respectively for general investors and mutual funds.
AAA Finance and Investment Ltd is the issue manager for the company's IPO.
AAA Finance and Investment's Managing Director Obaidur Rahman told The Business Standard, "We hope general investors will not be harmed by investing in Walton."
Walton Hi-Tech will use the IPO proceeds to extend its businesses, repay bank loans and meet IPO costs.
According to a research report of Prime Bank Investment Ltd, the price of Walton's shares will be Tk392.46 as per historical earning-based approach.
Walton has at present a 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.
Besides, the company's net asset value per share with revaluation was Tk243.16, and without revaluation Tk138.53, during the last financial year.
Walton Hi-Tech – which started its journey 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 demands.