Esquire Knit to spend Tk 576cr on expansion
Esquire Knit Composite, a strategic business unit of Esquire Group, plans to invest Tk 576 crore in business expansion to meet the growing demand from international retailers.
Of the amount, Tk 340 crore will come from local and foreign loans, Tk 86 crore from the company's own funds and the rest Tk 150 crore from the capital market, a top official said.
“We need to expand our business to meet the increasing demands from our existing clients,” Ehsanul Habib, managing director of Esquire Knit, said at a roadshow in Dhaka on Tuesday organised as part of its initial public offering (IPO) plan.
C&A, Zara, Esprit, Only, Tee Jays, Fynch-Hatton and Hunkemoller are some of the international buyers of Esquire Knit. With the funds, the export-oriented knit garments factory will set up new units at Bhaluka in Mymensingh and expand the existing unit at Sonargaon in Narayanganj, said Habib.
Esquire Knit will use book building method to raise Tk 150 crore from the capital market. Of the proceeds, Tk 100.42 crore will be used for constructing buildings, Tk 43.14 crore for buying dyeing and washing machinery, and the rest Tk 6.44 crore for bearing IPO expenses.
Eligible investors such as merchant banks, asset management companies, stock dealers, banks, financial institutions, insurance companies, alternative investment fund managers and other institutions attended the roadshow, which is a requirement under the book building regulations before price discovery of a company's shares.
Book building is a process through which an issuer attempts to determine the price to offer for its security based on demand from institutional investors.
The price of an IPO share is determined through an automated bidding participated by financial institutions.
The shares are then opened for the IPO participants at the cut-off price. The method was suspended and then revised by the regulator following the 2011 market crash.
Prime Finance Capital Management is the issue manager of the Esquire Knit IPO.
Habib said Esquire Knit has emerged as a conglomerate with knitting, fabric dyeing and finishing, cutting, sewing, industrial laundry, embroidery, printing and washing facilities under one roof.
Presently, he said, about 8,000 employees are working at the company, and the expansion will create employment opportunities for another 10,000 people.
Esquire Knit's revenue stood at Tk 196.7 crore in the July-December period of 2016. Its net profit was Tk 15.55 crore with earnings-per share of Tk 1.55 during the same period, while the net asset value per share stood at Tk 44.26. It has a paid-up capital of Tk 100 crore.
At present, 47 textiles and garment companies are listed on Dhaka Stock Exchange, accounting for about 4 percent of total market capitalisation.