The power company is raising Tk225 crore from the public via the book-building method
General investors will get the chance to sign up for the stock sale of Baraka Patenga Power Limited from June 13, which will continue until June 17.
The power company is raising Tk225 crore from the public via the book-building method.
According to the book-building method of the initial public offering, 60% of the company's shares will be issued to eligible institutional investors, who have set the cut-off price at Tk32 each through bidding.
The general investors will get its IPO shares at Tk29 each, a 10% discount on the cut-off price, as per 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 Tk144.3 crore on equity investments in Karnaphuli Power and Baraka Shikalbaha Power and Tk74.9 crore to pay back bank loans.
Baraka Power Patenga holds 51% 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 Tk67.4 crore as profit, up a staggering 123.9%.
LankaBangla Investment is the issue manager for the company's IPO process.