Price-bidding for eligible investors (EIs) to fix the cut-off price of shares of Lub-rref (Bangladesh) Ltd, a local lubricant producer, will commence from October 12 at 5:00pm.
The Chattogram-based company’s shares bidding through electronic subscription system (ESS) of the exchanges will be continued until 5:00pm on October 15, according to a discourse on Tuesday.
The valuation report submission period for eligible investor through ESS will start at 10:30am on October 18 and continue till 10:30am on October 20.
Only the eligible investors can participate to explore the cut-off price of the company’s shares under the electronic bidding process.
Each eligible investor who intends to participate in the electronic bidding for the company’s shares shall maintain a minimum investment of Tk 10 million in listed securities as on the end of October 4 as per the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.
The minimum tick size (minimum bidding value) for bidding shall be Tk 5.0 million which is accordance with the BSEC consent letter to Lub-rref (Bangladesh) dated September 3, according to the disclosure.
The stock market regulator allowed Lub-rref (Bangladesh) to explore its cut-off price on August 20 - a requirement for going public under the book building method.
As per the regulatory approval, the local lubricant company will raise a capital worth Tk 1.50 billion from the capital market.
The IPO proceeds will be used for expanding its existing refinery plat with an aim to meet the growing demand for lubricants from both home and abroad and repay some expensive bank loans.
Alongside the construction of a new base oil refinery at the Julda Industrial Theme Park in Chattogram, the company will expand its present factory and fit it with the means to produce a higher grade of lubricant products.
To finance the expansion, around Tk 980 million will be funded through Lub-rref’s initial public offering (IPO) proceeds.
“We will invest Tk 980 million to expand our existing manufacturing plant, which would enable us to capture 20 per cent market volume, from the existing 8.0 per cent,” said Mofizur Rahaman, chief financial officer (CFO) of the company.
The eligible investors will get 50 per cent shares at the cut-off price which will be set through electronic bidding.
The remaining 50 per cent shares will be opened to the IPO participants, including general investors and non-resident Bangladeshis, at a 10 per cent discount on the cut-off price, according to the book-building method.
As of the fiscal year that ended on June 30, 2019, the company earned Tk 2.08 against each of its shares, while the five years’ average earnings per share were Tk 2.23.
The net asset value per share of the company, with a Tk 1.0 billion paid-up capital was Tk 31.92 a year ago, while it would be Tk 25.96 without adding the revaluation surplus of assets.
NRB Equity Management is working as the issue manager to company’s IPO process.
Incorporated in 2001, the company commercially launched its manufacturing plant in 2006. It has gained respect for its state-of-the-art testing facility, according to the company CFO.
Luf-rref, whose products are branded as BNO Lubricants, recently introduced Nynas technology based transformer oil and nano technology based lubricants to minimise carbon emissions and ensure engine longevity.
The lubricants company makes 60 per cent of products with responsibly recycled lubricants while the remaining 40 per cent is made out of imported base oils.
About 60 per cent of BNO lubricant products are being used by the automotive sector while 35 per cent is used by various industries, including power transformers, power plant factories and industrial generators.