United Power Generation and Distribution Company Limited, a private power enterprise, submitted its prospectus to the securities regulator last week with indicative price of Tk 60 including Tk 50 premium for initial public offering under the book-building method.
The Bangladesh Securities and Exchange Commission officials said they would check the proposal of the United Power thoroughly as it was the first company to come under the controversial book-building method after the SEC had withdrawn the suspension on the method in 2011.
After the 2010-11 debacle of share market, 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.
United Power submitted its information memorandum to the DSE in the first week of March and a road show was held on March 17 for price discovery.
Sixty-one eligible institutional investors proposed different indicative prices and 28 EII supported Tk 60 as indicative price, Lankabangla Investments chief executive officer M Shakil Islam Bhuiyan told New Age.
Earning per share of United Power was shown at Tk 10.21 in the audited financial statement for the year ended on December 31, 2012 which was Tk 5.37 in the earlier year.
It also showed Tk 16.30 as net asset value per share according to the financial statement of December 31, 2011.
According to the information memorandum of the company, United Power will offload 3 crore shares through IPO for business expansion and repayment of its debt.
According to the IM, the Rural Electrification Board and Bangladesh Power Development Board purchase 32 per cent of the total power generated by the United Power.
The power purchase agreement with REB and BPDB would end in 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 Processing Zone and Dhaka Export Processing Zone.
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.
-With New Age input
