RAK Ceramics discovers share price for IPO

The public offer price for each RAK Ceramics share has been fixed at Tk 48, as discovered by institutional investors through bidding under the book building method, now being used for the first time in an IPO.
The institutional quota for shares of the Bangladesh-UAE joint venture was oversubscribed by more than 15 times, issue managers said.
Of the 175 registered eligible institutional investors, 168 bid for 69.02 lakh RAK shares of Tk 10 each on March 1-3.
Based on an indicative price of Tk 40 a share, the highest bidding price was Tk 48 and the lowest was Tk 40 and the cut-off price (the price for public offering) was determined at Tk 48.
With the completion of institutional bidding under the book building method, public subscription may begin in the second week of next month.
The book building mechanism, a widely practised price fixing mechanism for IPO (initial public offering), was introduced in March last year to encourage private-sector entrepreneurs to list their large and profitable companies on bourses at fair prices.
“The tentative date for public subscription is between April 11-18, as we need to take approval from the regulator,” said Saiful Islam, vice-chairman of BRAC-EPL, joint issue manager of the RAK IPO. IDLC Finance is the lead issue manager.
He was speaking at a function in Dhaka yesterday on completion of the institutional bidding.
The tiles and sanitary-ware maker will float 3.45 crore ordinary shares, with 20 percent reserved for institutions, 10 percent for non-resident Bangladeshis, 10 percent for mutual funds and the rest 60 percent for the general public.
Addressing the function, Sangam Lal, finance controller of RAK Ceramics (Bangladesh), said his company would use the fund raised through the IPO to pay back bank loans and expand business.
“But business expansion, in some way, depends on the smooth supply of gas."
RAK's existing paid-up capital is Tk 195 crore, which will increase to Tk 230 crore after the IPO.
Foreign entrepreneurs own 90 percent of the company, while local entrepreneurs own the remainder, but local ownership will become 20 percent after the IPO.
RAK started business in Bangladesh in 2001. Presently, the company holds a 70 percent share of the sanitary-ware market and around 25 percent of the ceramics market.
Located in Gazipur, the company has production capacity of 22,000 square metre tiles and 3,000 pieces of sanitary-ware a day.
The company holds a 58 percent share in RAK pharmaceuticals, 57 percent in RAK Power, 35 percent in RAK Security, 40 percent in RAK Paints, 51 percent in RAK Foods and 51 percent in Classic Porcelain.
DSE President Rakibur Rahman, CSE President Fakhor Uddin Ali Ahmed and IDLC Finance Managing Director Selim RF Hussain also spoke.