Laugfs sells Bangladesh business to Hong Kong’s Kai Heng Long for $23.39m
Laugfs Gas said in a stock filing that it divested a 69% stake or 2,645,203 ordinary shares it directly held in its subsidiary Laugfs Gas Bangladesh Limited (LGBL), for $16.1 million on October 15. However, the filing did not give any indication about the buyer
Sri Lankan Laugfs Gas PLC has sold its liquefied petroleum gas (LPG) bottling and distribution business in Bangladesh to Hong Kong-based Kai Heng Long Global Energy Ltd for $23.39 million.
The firm in its regulatory disclosure in the Colombo Stock Exchange on Wednesday said it had sold its 69% stake of Laugfs Gas (Bangladesh) Limited for $16.146 million and its Dubai-based subsidiary Slogal Energy DMCC sold the remaining 31% stake for $7.254 million.
Although Laugfs did not disclose the identity of the buyer, industry sources on Thursday confirmed the Hong Kong-based energy firm's name.
Keep updated, follow The Business Standard's Google news channel
Laugfs Gas PLC would utilise the sales proceeds to reduce its debt exposure, according to its regulatory filing.
Laugfs Gas recently said new entrants were eating into its market share in Bangladesh, due to unhealthy competition.
In a report published in the Sri Lankan Daily Mirror, the company said, "Our operations in Bangladesh continued to face severe competition and rivalry, due to the large number of new entrants. While we consider competition to be healthy, numerous unhealthy, unethical practices by many entrants have affected the ethical players in the market and resulted in a decrease in our market share in Bangladesh."
Laugfs Bangladesh contributed to around 20-31% of the group's revenue and assets in the last fiscal year respectively.
The Bangladesh entity started its journey in 1997, growing its market share to 21% in 2015.
It did not, however, keep pace with the fast growth of the rapidly expanding LPG market, with many larger players and new entrants taking over Laugfs's market share, which has since fallen to 4-5%.
Even though LPG history dates back several decades, Bangladesh seriously embraced LPG as a cooking gas in the early 2010s and since then the annual market has grown nearly tenfold to over 13 lakh tonnes, which is predicted to reach 30 lakh tonnes by the end of 2030.
More than two dozen companies, including a number of foreign and joint-venture firms, are competing in the market while exits and entries have also increased in recent times.
