Baraka Patenga Power Limited has received approval from the Bangladesh Securities and Exchange Commission (BSEC) to issue shares at the cut-off price of Tk32 each, in their initial public offering (IPO).
Recently, the securities regulator gave the approval at a meeting held at its office. The company will raise Tk225 crore from the capital market to expand its business.
BSEC sources said the commission will give the consent letter to determine the IPO subscription date taking the lockdown situation into account.
Institutional investors will buy primary shares of Baraka Patenga Power Limited at Tk32 each while the general public is to get a 10% discount on the price.
Institutional investors set the cut-off price at a 72-hour bidding held between 22 to 25 February this year.
On 5 January, Baraka Patenga received approval from BSEC to explore the price of its primary shares in order to raise Tk225 crore from the market.
The company will utilise Tk144.34 crore, part of its IPO proceeds, to invest in two of its power generation subsidiaries – Karnaphuli Power Ltd and Baraka Shikalbaha Power Ltd.
The remaining funds will be used to repay loans and bear expenses of the IPO process, BSEC said in a statement.
LankaBangla Investments Ltd, a leading local merchant bank, is the issue manager of the Baraka Patenga IPO.
BSEC also decided the company cannot further increase its paid-up capital by issuing bonus shares within the next five years. Also, the company must hold at least 51% shares of its two subsidiaries, according to the regulator.
At the end of fiscal 2019-2020, Baraka Patenga's net asset value (NAV) per share stood at Tk23 without asset revaluation surplus added. The company's NAV per share was Tk20.98, excluding that of its subsidiaries.
In the last fiscal year, the company's consolidated earnings per share (EPS) stood at Tk4.37, which was Tk1.84 on a solo basis. The five-year weighted average of the company's consolidated EPS was Tk3.30, which would be Tk2.82, if profits of subsidiaries were excluded.
Baraka Group, primarily a venture of non-resident Bangladeshis, started in the mid-2000s to develop a modern residential area in Sylhet.
The group went into the power generation business more than a decade ago and its first power venture – Sylhet Barakatullah Electrodynamics, now Baraka Power Ltd – is listed on both the bourses.
The group also expanded its business into apparel exports, and collaborated with globally renowned technical partners and financiers – such as the World Bank Group's International Finance Corporation (IFC) – which helped the group grow further in the power generation sector.
Baraka Patenga Power owns a 50MW power plant – located in Patenga, Chattogram – which started operating commercially in May 2014. Baraka Power owns 51% shares of Baraka Patenga.
Baraka Patenga is now working on strengthening its subsidiaries, both of which are already in operation but are still awaiting improvement of their equity structures in order to avail necessary loans.
Baraka Shikalbaha, a 105MW heavy fuel oil-based power plant, came into production in May 2019, while Karnaphuli Power, a 110 MW plant, started generating power in August that year.