The cut-off price of shares of Lub-rref (Bangladesh) Ltd, a local lubricant producer, has been fixed at Tk 30 each through electronic bidding by eligible investors.
The eligible investors took part in the price discovery of the Chattogram-based lubricant company’s shares by bidding for 72 hours – from 5:00pm on October 12 to 5:00pm on October 15, as per the book building method.
During the period, 208 institutional and eligible investors offered different prices to buy the company’s shares. Among them, most bids were Tk 55 and Tk 27 each, according to the data from the electronic subscription system (ESS).
A total of 14 bidders offered Tk 55 each and 13 bidders offered Tk 27 each to buy the lubricant company’s shares.
The highest bidding price was Tk 60 and the lowest bidding price was Tk 13 each, according to the ESS data.
The stock market regulator – Bangladesh Securities and Exchange Commission - allowed the company to explore its cut off price on August 20 - a requirement for going public under the book building method.
The local lubricant company will raise a capital worth Tk 1.50 billion from the capital market under the book-building method.
As per the book building method, the eligible investors will buy 50 per cent or worth Tk 750 million shares at the cut-off price which has been set at Tk 30 each 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, meaning the general investors will get IPO shares at Tk 27 each.
The IPO proceeds will be used for expanding its existing refinery plant with an aim to meet the growing demand for lubricants from both home and abroad and repay some expensive bank loans.
To finance the expansion, around Tk 980 million will be funded through IPO proceeds, which would enable the company to capture 20 per cent market share, from the existing 8.0 per cent, company officials said.
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.
As of the fiscal year that ended on June 30, 2019, the company’s earnings per share (EPS) stood at Tk 2.08, while the five years’ weighted average EPS was 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 with the revaluation surplus of assets.
NRB Equity Management is working as the issue manager for the company's IPO process.
Incorporated in 2001, the company commercially launched its manufacturing plant in 2006.
