United Power Generation and Distribution Company, a private power enterprise, on Thursday announced that it would go public under the ‘Book-Building Method’ for the first time after the controversial method was amended following the 2010-2011 stock market crash.
The company is scheduled to hold a road-show for institutional investors on April 17 to set the indicative price for initial public offering, according to a news posted on the Dhaka Stock Exchange web site on Thursday.
The company submitted its information memorandum to the DSE in the first week of March.
DSE officials said although the company initially submitted its prospectus to the Bangladesh Securities and Exchange Commission, later it decided to offload shares under Book Building Method after withdrawing the prospectus from the commission.
In the book-building method, introduced in 2009, a company sets its share price for initial public offering for general investors based on the price set through the price quoted by institutional investors at the road show.
After the share market debacle in 2010-11, the BSEC as per a government directive suspended the book-building system in January 2011 till October 2011.
The book-building method was highly criticised for allowing floatation of over-priced shares which created bubble in the stock market in late 2010.
The BSEC amended the book-building method in September 2011 by tightening the price quoting by the institutional investors.
DSE officials said that it was easy to manipulate the IPO price of shares through book-building method through syndicated price quoting by the institutional investors.
According to the information memorandum of the company, United Power Generation and Distribution Company Limited will raise the capital through IPO for business expansion and repayment of its debt.
It said that the Rural Electrification Board and Bangladesh Power Development Board purchased 32 per cent of the total power generated by the United Power.
The IM said that the power purchase agreement with REB and BPDB would end by 2015.
The company has a 15 year agreement with Oli Knitting Fabrics Limited to supply only 1MW of electricity.
The IM has not mentioned the selling unit of power the company supplied to the Chittagong Export Procession Zone and Dhaka Export Processing Zone.
An official of Lankabangla Investment Ltd, the issue manager of the United Power, however, hoped that the REB and PDB would extend the contracts with the United Power.
‘As United Power is the only power supplier of DEPZ and CEPZ, the company can supply as much electricity as the zones need,’ Lankabangla Investments’ chief executive officer M Shakil Islam Bhuiyan told New Age on Thursday.
-With New Age input
