The bidding to determine the price of Baraka Patenga Power Ltd primary shares is going to begin on Monday.
According to rules for initial public offering (IPO) under book building method, eligible institutional investors (EIIs) would bid for the company shares quoting price and quantity of shares.
The cut-off price, at which half of the IPO shares are sold, would be the reference price for general public who would subscribe for the remaining half of the IPO shares at 10% discount.
EIIs now need to have at least Tk1 crore in secondary market investments to qualify for book building bidding, which is half for provident and gratuity funds.
As Baraka Patenga's bidding deferred for a week, the date to record EIIs secondary market investment balance also has been deferred to February 11, which was February 7 initially.
However, to make things easier for investors, the securities regulator said the qualifying investment balance at any of the two days, technically called requisite investment dates, would do.
Currently, there are more than 500 active registered EIIs in Bangladesh stock market.
The 72 hour bidding will begin at 5.00 pm on Monday and end at 5.00 pm on Thursday.
On 5 January, Baraka Patenga received approval from the Bangladesh Securities and Exchange Commission (BSEC) to explore the price of its primary shares in order to raise Tk225 crore from the market.
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 remaining funds will be used to repay loans and bear expenses of the IPO process, the BSEC said in a statement.
LankaBangla Investments Ltd, a leading local merchant bank, is the issue manager of the Baraka Patenga IPO.
During approval, the BSEC instructed that the company cannot further increase its paid-up capital by issuing bonus shares within the next five years.
Also, the company will have to hold at least 51% shares of its two subsidiaries.
At the end of fiscal 2019-2020, Baraka Patenga's net asset value (NAV) per share stood at Tk23 without asset revaluation surplus added. The company's NAV per share was Tk20.98, excluding that of its subsidiaries.
In the last fiscal year, the company's consolidated earnings per share (EPS) stood at 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, primarily 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 its business into apparel exports, and collaborated with globally renowned technical partners and financiers – such as the World Bank Group's International Finance Corporation – which helped the group grow further in power generation sector.
Baraka Patenga Power owns a 50MW power plant – located in Patenga, Chattogram – which started its commercial run in May 2014. Baraka Power owns 51% shares of Baraka Patenga.
Baraka Patenga is now working to strengthen its subsidiaries, both of which are already in operation but still awaiting improvement of their equity structures in order to avail 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.