Baraka Patenga Power Limited COURTESY
The share bidding of Baraka Patenga Power Limited, which is in the process of initial public offering (IPO) under book building method to enter the capital market, is set to start from today( Monday) at 5pm as the company aims to raise a fund of Tk 225 crore through initial public offering (IPO).
The quota shares allotted to them will be sold to the eligible investors through auction. From the IPO proceeds, the company will invest Tk 144 crore in two of its subsidiaries -- Karnaphuli Power Ltd (KPL) and Baraka Shikalbaha Power Ltd (BSPL). The rest of the funds will be used to repay loans and bear the expenses of the IPO.
As the company is seeking premium over its face value, it will fix a cut-off price by bidding among eligible investors. Retail investors will get the shares at 10 per cent lower than the cut-off price. The bidding will commence from February 22 and will continue till February 25, according to a disclosure posted on the Dhaka Stock Exchange website. The valuation report of the bidding would be submitted between February 28 to March 2, it said.
Eligible investors should maintain a minimum investment of Tk 1 crore while the amount would have to be Tk 50 lakh for pension funds, recognised provident funds and gratuity funds. The KPL and the BSPL have already started commercial operation after implementing two plants run by heavy fuel oil. The two have a generation capacity of 110MW and 105MW respectively.
"Our mission is to become the largest power generating company in the private sector by developing more power plants across the country," said Gulam Rabbani Chowdhury, chairman of Baraka Patenga Power. Earlier, on December 31, 2020, Baraka Patenga Power's bid to raise Tk 225 crore from the market received the green light from the Bangladesh Securities and Exchange Commission.
"Both the companies, otherwise, would have to look for alternative sources of financing to meet such deferred obligations, which might be much costlier resulting in lower profitability," he added. Baraka Power Ltd, parent company of Baraka Patenga Power, got listed with the country's bourses in 2011. Baraka Patenga Power holds 51 per cent shares of both the companies, whose main role is to generate and supply electricity to the national grid.
In the 2019-20 financial year that ended on June 30, the company logged Tk 67.4 crore in profits, up 123.9 per cent year-on-year. After the repayment of long-term debt of Baraka Patenga Power with a portion of the IPO proceeds, the company's profitability would increase, Chowdhury said.
For the first time in the power sector in Bangladesh, a desulphurization plant was introduced to the project to reduce Sulphur emissions to an acceptable level, said Monzur Kadir Shafi, managing director of Baraka Patenga Power. Two of its subsidiaries are not running at full capacity due to incapacity of distribution line at present, he said. "After May 2021, we will be able to run both the plants with full capacity, which will increase revenue significantly," Shafi added.