Generation Next IPO gets green light
The Securities and Exchange yesterday approved the IPO application of Generation Next Fashions Ltd to raise Tk 30 crore from public.
Generation Next hopes to raise the sum through three crore ordinary shares at Tk 10 each using the fixed price method.
The textile maker, whose earnings-per share was Tk 2.09 as of December 2011, will use the IPO proceeds for loan repayment and business expansion.
Although the company sought Tk 24 as premium, in addition to Tk 10 as face value, the SEC did not sanction the premium.
BRAC-EPL Investment Ltd is the issue manager of Generation Next's IPO.
In October 2010, the SEC scrapped the IPO prospectus of Generation Next after the regulator had found the textile company to be in violation of the asset valuation rules.
A SEC probe on the matter found Generation Next to have showed the land of its chairman as company property and presented an inflated asset valuation to get higher indicative prices for its shares.
The textile maker then had plans to float three crore ordinary shares using the book building method, a modern pricing mechanism for IPOs.
The indicative price of each Generation Next share was fixed at Tk 50, with face value of Tk 10 and Tk 40 in premium.
Apart from the higher asset valuation, the SEC found the audit of both the financial report and asset valuation to have been conducted by the same audit firm, which is not permitted under SEC rules.
Generation Next eventually had to forfeit the book building method due to the stock market crash of January last year.
Although the book building system have since resumed with modified rules, no company is yet to utilise the method for IPO.
Generation Next, a composite knit manufacturer, was formed in 2006.
The company currently supplies products to top retailers in the US and Europe, such as Tesco, Primark, Asda, Carrefour, Wal-Mart, United Colors of Benetton, Matalan. At present, 26 textile companies are listed on the stockmarket.
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