Most bids hovered between Tk 25 and Tk 32
The cut-off price of shares of Baraka Patenga Power has been set at Tk32 each after bidding by eligible institutional investors ended on Tuesday.
As per the book building method, eligible institutional investors took part in the price discovery of the shares by bidding within 72 hours, which began on Sunday.
During this period, 357 eligible investors offered different prices to buy the company’s shares.
Most bids hovered between Tk 25 and Tk 32.
A total of 183 bidders offered Tk 32 each while 39 bidders offered Tk 25 each.
The highest bidding price was Tk 32 and the lowest was Tk 13.
Retail investors will get the shares at a 10 per cent discount price.
As per regulatory approval, Baraka Patenga Power will raise Tk 225 crore from the capital market under the book-building method.
Of the IPO proceeds, Baraka Power Patenga, whose parent company Baraka Power, is already listed on the bourses since 2011, intends to spend Tk 144.3 crore on equity investments in Karnaphuli Power and Baraka Shikalbaha Power and Tk 74.9 crore to pay back bank loans.
Baraka Power Patenga holds 51 per cent shares of both the two companies, whose main role is to set up power plants and supply electricity to the national grid.
The equity investments would be used to settle the deferred obligations for genset procurement.
A genset refers to an equipment whose function is to convert the so-called heat capacity into mechanical energy and then into electrical energy.
If the funds are not collected from the IPO, then both the companies will have to look for alternative sources of financing to meet such deferred obligations, which might be much costlier resulting in lower profitability, said Gulam Rabbani Chowdhury, chairman of Baraka Power Patenga.
After the repayment of long-term debt of Baraka Power Patenga with a portion of the IPO proceeds, the company’s profitability would increase as it would lessen the strain on cash flow.
“Our mission is to become the largest power generating company in the private sector by developing more power plants across the country,” Chowdhury said.
Established in 2011, Baraka Power Patenga is one such company.
The company cannot declare bonus dividends for five years from the date of issuance of consent letter over its IPO.
The commission also directed the company to hold 51 per cent shares of its subsidiary companies at all times.
In its 2019-20 financial year that ended on June 30 last year, the company logged in Tk 67.4 crore as profit, up a staggering 123.9 per cent.
LankaBangla Investment is the issue manager for the company’s IPO process.
