The Bangladesh Securities and Exchange Commission (BSEC) approved an initial public offering of Tk225 crore by Baraka Patenga Power Limited on Tuesday.
The regulator initially allowed the private power generation company to go for eligible institutional investors' bidding which will set the reference price of its primary shares, technically expressed as the cut-off price for an IPO under the book building method.
The company will utilise part of its IPO proceeds of Tk144.34 crore to invest 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, leading local merchant bank, is the issue manager of the Baraka Patenga 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% shares of its two subsidiaries, according to the BSEC.
At the end of the 2019-2020 fiscal year, Baraka Patenga's net asset value (NAV) per share stood at Tk23 without asset revaluation surplus added. 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 went into the power generation business more than a decade ago and its first power venture – Sylhet Barakatullah Electrodynamics, now Baraka Power Ltd – is listed on both bourses.
The group also expanded into apparel exports, and collaborated with the world's 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.