The board of directors of the publicly listed company United Power Generation and Distribution Company Limited (UPGDCL) has decided to acquire two power plants of United Group.
The power plants are United Anwara Power Ltd, with a 300MW capacity, and United Jamalpur Power Ltd with a 115MW capacity.
UPGDCL will buy 99% shares of each of the power plants, effective from July 1, 2020 at net asset value (NAV), based on financial statements from June 30 this year, informed the Dhaka Stock Exchange (DSE) website on Wednesday.
The shareholders' approval of the acquisitions is likely to be finalised at an extraordinary general meeting (EGM) dated October 28, 2020. The record date is set for October 6.
Moinuddin Hasan Rashid, managing director of UPGDCL, told The Business Standard that the net acquisition cost for UPGDCL is Tk20 crore. The total NAV of the two plants is around Tk535 crore, while their total cash reserve is Tk515 crore.
The two power plants started their operations in the 2019-20 financial year and have proven their strength since. UPGDCL shareholders would benefit from the next 14 years' revenues and profits of the plants.
"As a part of our commitment to maximise shareholders' value, we have been trying to gradually add the group's power ventures with a proven track record," the managing director added.
In the 2019-20 financial year, United Anwara made a net profit of Tk324 crore and United Jamalpur of Tk138 crore, said an official of the company.
The two power plants will jointly add Tk8.76 in the earnings per share (EPS) of UPGDCL, he added.
An equity research note by a top brokerage firm estimated that the two plants may boost UPDGCL's consolidated net profit by around 70%.
The paid-up capital of the two power plants is Tk10 crore, each. UPGDCL will acquire 99 lakh shares of the two power plants, each, from United Enterprise Company Ltd and other individual investors.
UPGDCL was listed with the DSE in 2015 under the book building method. Its paid-up capital is Tk526.99 crore.
Its share price has risen by 45% since August this year. The closing price of each share of the company was Tk317.90 at the DSE on Wednesday.
However, UPGDCL's net profit decreased by 24% to Tk482.46 crore in the first three quarters of the 2019-20 financial year. Its EPS stood at Tk8.94.
"There was an extraordinary gain from the disposal of subsidiaries during the corresponding period of the previous year. But no such gain occurred during the period that ended on March 31, 2020," said an official of the company.
"The 53MW power plant of Ashuganj was fully operational in the previous period but during the current period, the plant has not been in operation as the contract period has expired. An application for its renewal is under process." he added.
In the 2018-19 financial year, the company made a net profit of Tk770.46 crore. It paid 130% cash and 10% stock dividends to its shareholders.
Sponsors and directors jointly owned 90% of the company's shares till August this year. The institutional, foreign and general investors owned 7.17%, 0.04% and 2.79% of the company's shares, respectively.