Eligible institutional investors have set the cut-off price for Lub-rref (Bangladesh) Limited's primary shares at Tk30 each.
General public will apply for buying the homegrown lubricant company shares at 10% discount from the set benchmark.
Following the securities regulator's approval, bidding for Lub-rref shares began on 12 October, and ended on 15 October 2020.
According to the stock exchanges which operate the electronic bidding platform, the bids ranged from Tk13 to Tk60 for each share having a face value of Tk10.
More than 200 institutional bidders offered more than Tk 174 crore to buy half of the IPO shares and from the cut off price the company is going to collect around Tk88 crore from them, out of its Tk 150 crore initial public offering.
The lubricant manufacturer will invest Tk98 crore to expand its existing manufacturing plant, which would enable the company to capture 20% market share, from the existing 8%, according to Lub-rref's IPO prospectus.
BNO Lubricants – a brand of the company – sells around 10,000 tonnes of lubricants annually for Tk175 crore.
Bangladesh's lubricant market, with an average 5% growth, has now risen to an annual demand of 1.2 lakh tonnes, and the annual turnover is around Tk6,000 crore, the prospectus added.
Incorporated in 2001, the company commercially launched its manufacturing plant in 2006.
Currently, 60% of Lub-rref's lubricants are made of responsibly recycled lubricants, while the remaining 40% are made from imported base oil – the key raw material for lubricant.
The repayment of expensive bank loans of Tk46 crore from the IPO fund would help the company reduce its finance cost. A total Tk6 crore is being spent on the public offering process.
As of the fiscal year that ended on 30 June 2019, Lub-rref earned Tk2.08 against each of its shares, while the five years' average earnings per share were Tk2.23.
The net asset value per share of the company, with Tk100 crore paid-up capital, was Tk31.92 a year ago; it would be Tk25.96 without adding the revaluation surplus of assets.
NRB Equity Management is working as the issue manager to facilitate the stock market listing of the company.