Qualified and institutional investors will buy 50% of the company's shares at the cut-off price
The cut-off price per share of Energypac Power Generation Ltd has been fixed at Tk35 through electronic bidding.
The Dhaka Stock Exchange (DSE) on Monday disclosed the cut-off price through Electronic Subscription System (ESS) of Bangladesh.
Qualified and institutional investors will buy 50% of the company's shares at the cut-off price.
Meanwhile, individual investors will be able to purchase the remaining shares at Tk31.50 per share, i.e., at a 10% 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 September 21 to 5pm on September 24.
During this period, 239 institutional and eligible investors offered to buy the company's shares at a range of rates. Most bids were received for Tk35 and Tk25.
The highest bidding price was Tk85, while the lowest was Tk16.
The company will collect Tk150 crore from investors, primarily to expand and energise its liquefied petroleum gas (LPG) business.
With the supply of natural gas through pipelines facing infrastructural constraints, LPG has gained momentum in Bangladesh over the last decade. In the last six years, the annual market demand for LPG tripled to around one million tonnes.
Most of the investors' funds will be used by Energypac to build a satellite station, popularly known as a daughter station, at Rupganj, Narayanganj with a storage capacity of 1,200 tonnes of LPG.
Given that Energypac will use a riverine route to carry a bulk of the LPG from its Khulna base to Narayanganj, and subsequently bottle it at a strategic location, the Rupganj station is anticipated to offer the company a cost and supply chain advantage.
It will also support the increased scale - from the existing 5,400 tonnes to over 6,000 tonnes – by adding to its existing set of cylinders and other ancillaries.
Energypac has received approval to set up 300 LPG refuelling stations nationwide and it has already entered into an agreement with the state-owned Padma Oil Company for 100 stations.
Energypac began its journey in 1995 as an electrical and engineering business. The company now consists of seven different divisions, according to an equity analysis report by brokerage firm, United Securities.
Its energy and power division supplies generators and provides operations, maintenance and installation services.
The motor vehicle division of the company imports, assembles and sells branded commercial vehicles and agro machineries.
Its LPG brand, G Gas, currently hovers between the sixth and eighth positions in terms of market share in Bangladesh's LPG market.
Meanwhile, Bangladesh Brand Forum considers G Gas as one of the top-three LPG brands in the country from a brand equity perspective.
Powerpac, the pre-engineered building and steel structure brand of the group, is also gaining market momentum.
Power, motor vehicle and LPG are the top three revenue earners for Energypac – 70% of its last year's Tk1,440 crore revenue.
Power generation is the biggest business for Energypac in terms of revenue. The earnings of three of its power plants constitute 36.7% of the company's annual revenue.
However, analysts are looking for higher profitability in Energypac's consolidated account.
The conglomerate's balance sheet size is over Tk3,500 crore with bank liabilities of around Tk2,000 crore. It earned a net profit of less than Tk50 crore in the last fiscal year.