Motorcycle maker Runner Automobiles plans to raise Tk 100 crore by using the book building method for business expansion and repayment of bank loans.
Of the proceeds from the initial public offering, Tk 63 crore will be spent on design and development of new products, machinery purchase and upgradation of existing models; Tk 33 crore for bank loan repayment; the remaining Tk 4 crore will be IPO expenses.
The company has a plan to develop new models of two wheelers in the range of 110cc to 150cc and build on its existing 80cc to 100cc model motorcycles.
It also aims to revamp its workshop with new dies and moulds for manufacturing the new models.
The expansion will help Runner get a competitive edge in the market, according to the company's information document. The information document was presented yesterday at a roadshow for institutional investors, held at the capital's Sonargaon Hotel.
The roadshow is a requirement under the book building regulations before the 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 the demand from institutional investors.
The price of an IPO share is determined through automated bidding joined 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.
In the information document, Runner said the dies, moulds, new product design and machinery will be procured primarily from Taiwan, China, India, Korea and Japan.
The new design of the two-wheelers will be marketed within 19 months of obtaining the IPO proceeds.
The expansion through this project will increase Runner's overall profitability, the company said.
Runner has paid-up capital of Tk 94.2 crore. Its earnings-per share stood at Tk 2.77 at the end of June this year, while the net asset value per share was Tk 52.47.
IDLC Investments is the issue manager of the IPO.
Eligible investors such as merchant banks, asset management companies, stock dealers, banks, financial institutions, insurance companies, alternative investment fund managers and other institutions approved by the securities regulator attended the roadshow.
Runner Automobiles, the flagship company of Runner Group, started its journey in 2000 and mainly engages in manufacturing and distributing two-wheelers in the local market.
Its annual production capacity is around 1 lakh two-wheelers, and they range from 50cc to 150cc with about 15 different types of models.