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Rubel Rana

Published:
2018-07-11 10:21:20 BdST

BSEC allows Runner Automobiles to explore cut-off price for IPO


FT ONLINE

The securities regulator has allowed Runner Automobiles to determine the cut-off price required to go public under book building method.

The approval came at a meeting at Bangladesh Securities and Exchange Commission (BSEC) on Tuesday.

 

The company will float IPO (initial public offering) under the book building method to raise a capital worth Tk 1.0 billion.

Under the book building method, institutional investors purchase shares of a company at a cut-off price determined through electronic bidding. And general investors get the shares at 10 per cent discount of the cut-off price.

Runner Automobiles will utilise the IPO fund for research and development works, purchasing machineries, repaying bank loans and bearing the IPO expense.

According to financial statement for the year ended on June 30, 2017, the company's net asset value (NAV) per share is Tk 55.70, with revaluation reserve. The value is Tk 41.94 without revaluation reserve.

And the weighted average of the EPS (earnings per share) is Tk 3.31.

Runner Automobiles is a motorcycle manufacturer in Bangladesh. The company manufactures 12 different types of motorcycles ranging between 80 CC and 150 CC. it has 15 per cent market share in the country's auto industry. The company also assembles three-wheelers and four-wheelers.

IDLC Investments is working as the issue manager.

At Tuesday's meeting, the BSEC also revised minimum shareholding provision for sponsor/promoter group while issuing private placement of shares.

As per exiting provision, sponsor/promoter group is required to hold minimum 30 per cent shares of the company for at least three years.

In the revised condition, the regulator has included directors in the sponsor/promoter group to facilitate 30 per cent shareholding condition.

The BSEC officials said that after the death or removal of one or more sponsor/promoters, a company faces difficulties in holding 30 per cent shares jointly.

That's why the company fails to issue private placement of shares fulfilling the condition of minimum shareholding by the sponsor/promoter group.

"The directors have been included in the sponsor/promoter group so that they can easily fulfill the condition of holding minimum 30 per cent shares during issuance of private placement of shares," a BSEC official said.

Meanwhile, the regulator also approved the proposal of issuing subordinated bond worth Tk 7.0 billion by The City Bank.

The tenure of the non-convertible floating rate subordinate bond will be seven years.

Different financial institutions and high net worth individuals will be allowed to purchase the units of the bond, which is fully redeemable within seven years.

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