| Rak Ceramics (Bd) Ltd Introduced Ipo Under ‘Book | | | | Ceramics, also spoke in the road show programme. |
| Building Method' First Time In Bangladesh. The | | | | RAK offers 34.51 million equity shares worth Tk 10 |
| Securities and Exchange Commission, the market | | | | each in face value under the book-building method. Of |
| regulator, gave the green light to RAK at a meeting on | | | | which, 20 per cent will be funded by eligible institutional |
| Wednesday, officials said. The tiles and sanitary-ware | | | | investors, 10 per cent by mutual funds, 10 per cent by |
| maker will float three crore ordinary shares worth Tk | | | | non-resident Bangladeshis and 60 per cent by public. |
| 10 each in face value under the book-building method. | | | | An indicative price for each RAK share has already |
| An indicative price for each RAK share has already | | | | been built at Tk 40, including a premium of Tk 30, |
| been built at Tk 40 through bidding by seven institutions | | | | through bidding by seven institutions from four sectors. |
| from four sectors. Now in the price discovery phase, | | | | According to the book building method, bidders cannot |
| bidders cannot quote 20 percent more or less than the | | | | quote 20 percent more or less than the indicative price, |
| indicative price, meaning they will have to offer | | | | meaning they will have to offer between Tk 32 and |
| between Tk 32 and Tk 48 for each share. Fixing the | | | | Tk 48 for each share. Fixing the indicative price is |
| indicative price is required to obtain regulatory approval. | | | | required to obtain regulatory approval. |
| Prime Bank, Southeast Bank and IFIC Bank joined the | | | | As of December 31, 2009, RAK's pre-IPO paid-up |
| indicative price bidding from the banking sector. Prime | | | | capital is Tk 1.86 billion. The company's net asset value |
| Finance and LankaBangla Finance participated in it as | | | | was Tk 13.69 a share and earning per share (EPS) |
| non-bank financial institutions, Mercantile Insurance as | | | | was Tk 1.83. |
| an insurance sector company and Royal Green | | | | Foreign entrepreneurs own 90 percent of the |
| Securities as a brokerage house.click here to result | | | | company, while local entrepreneurs own the rest, but |
| "We will start work for price discovery after receiving | | | | local ownership will increase to 20 per cent after |
| written approval from SEC. We hope to complete the | | | | post-IPO. |
| work by January," Arif Khan, chief executive officer | | | | RAK started commercial operation in Bangladesh in |
| and managing director (current charge) of IDLC | | | | late 2000. Presently, the company has the market |
| Finance, told The Daily Star. IDLC Finance is the lead | | | | shares over one-fourth of tiles and more than |
| issue manager of the RAK Ceramic IPO, while | | | | three-fourth of sanitary ware products. Book Building is |
| BRAC-EPL is the co-issue manager. The institutions | | | | a method through which companies determine the |
| will not be allowed to sell shares in the first 15 trading | | | | values of their IPOs based on the bidding prices from |
| days under the lock-in system. RAK's paid-up capital is | | | | the eligible institutional investors. The SEC introduced |
| Tk 195 crore. As of June 30, the company's net asset | | | | the method in March aiming to encourage |
| value was Tk 18 a share and earnings per share were | | | | private-sector entrepreneurs to list their large and |
| Tk 1.99. Foreign entrepreneurs own 90 percent of the | | | | profitable companies with bourses at fair prices. |
| company, while local entrepreneurs own the remainder, | | | | It is the process by which a price will be determined by |
| but local ownership will become 20 percent after the | | | | institutional investors on the basis of an indicative price |
| IPO. RAK started business in Bangladesh in 2001. | | | | offered by the issuer company. |
| Presently, the company holds around 80 percent | | | | Using the method, the issuer company will first ask for |
| market share in the sanitary-ware market and around | | | | share prices from the institutional investors by |
| 35 percent in the ceramics market. PRICE | | | | organising road shows, projection meeting and seminar |
| DISCOVERY The book building mechanism, a widely | | | | on the company. |
| practised price fixing mechanism for IPO, was | | | | Then the company in association with its issue |
| introduced in March, aiming to encourage | | | | manager will fix an indicative price, which will have to |
| private-sector entrepreneurs to list their large and | | | | be based on offering prices by at least five institutions |
| profitable companies on bourses at fair prices. In line | | | | in three categories, and send it to the securities |
| with the book building mechanism, institutions bid for | | | | regulator and stock exchanges. |
| shares through which the price is discovered. A | | | | Based on the indicative price, the institutions will bid for |
| weighted average price is fixed based on the highest | | | | shares. |
| and lowest price and shares are allotted for institutions | | | | However, the bidders could not quote 20 percent |
| at the weighted average price. The lowest price is | | | | more or less from the indicative price. Then a |
| considered a cut-off price for public offers or general | | | | weighted average price will be fixed based on the |
| investors. RAK Ceramics, a Bangladesh-UAE joint | | | | higher and lower prices and shares will be allotted for |
| venture, has started process under book-building | | | | institutions at the weighted average price. |
| method to hit the country's stock market. | | | | The lowest will be considered as cut-off price for |
| It is the first company, which will make debut on Dhaka | | | | public offerings or general investors. |
| Stock Exchange (DSE) and Chittagong Stock | | | | The institutions will not be allowed to sell shares in the |
| Exchange (CSE), using such modern pricing | | | | first 15 trading days under the book building's lock-in |
| mechanism for initial public offering (IPO) introduced in | | | | system. Book building method to encourage companies |
| March of last year. | | | | to enlist with stock exchange Book Building Method, |
| As part of the process, the tiles and sanitary-ware | | | | a new system of modern pricing mechanism for IPOs, |
| maker held an IPO road show to woo the eligible | | | | would encourage companies to enlist with stock |
| institutional investors in a city hotel Saturday. RAK | | | | exchanges as it ensures fair pricing of initial public |
| received primary approval for floating shares from the | | | | offerings (IPO). |
| securities regulator in December. | | | | This was told by President of Dhaka Stock Exchange |
| Within next three weeks, it will begin to sell shares | | | | (DSE) Md. Rakibur Rhaman at a seminar on `Book |
| among the institutional investors after receiving SEC | | | | Building Method and IPO' at a city hotel here today. |
| consent's on bidding. Institutional bidding will be | | | | He said the book building method will play a significant |
| executed by DSE and CSE. | | | | role in encouraging entrepreneurs to list their firms, said |
| Subscription for general investors will open 25 days | | | | a press release. |
| from the closure of the institutional bidding. | | | | Book building is a method through which companies |
| Chairman of RAK Ceramics (Bangladesh) Khater | | | | determine the values of their IPO's based on the |
| Massaad described the company's prospects and | | | | bidding prices from the institutional investors. |
| future plan to impress the institutional investors. | | | | RAK Ceramics (Bangladesh), a Bangladesh-UAE joint |
| "We feel very proud to come in Bangladesh," said | | | | venture, organized the seminar. Managing Director of |
| Massaad. A large number of people and growing per | | | | RAK Ceramics SAK Ekramuzzaman gave vote of |
| capita income have been creating demands for | | | | thanks. |
| products, which mainly attracted us to invest in the | | | | A multimedia presentation on the maiden book-building |
| growing market of Bangladesh, he said. | | | | method was screened at the seminar, joined, among |
| He said, "Meeting the local demands, the company has | | | | others, by chairman of RAK Ceramics Dr. Khater |
| already begun to export products to India, Sri Lanka | | | | Massaad. |
| and Nepal and plans to enter in European market". | | | | Massaad said the RAK could be turned into a large |
| IDLC Finance is the lead issue manager of the RAK | | | | industry in Bangladesh. He said the book building |
| Ceramic IPO, while BRAC-EPL Investments Ltd is the | | | | method might generate huge employment opportunities |
| joint issue manager. | | | | for the country's unemployed youths if due importance |
| Arif Khan, deputy managing director of IDLC Finance | | | | is given on it. |
| Ltd, presented the company's financial strength while | | | | The RAK Ceramics (Bangladesh) is going to be the |
| Saiful Islam, director of BRAC-EPL, explained logic of | | | | first to offer primary shares using the book building |
| the company's indicative price and described the | | | | method. The joint venture company has already got |
| bidding process. | | | | approval from the Security Exchange Commission in |
| Mr Arif also responded to the volley of questions | | | | this regard. |
| asked by the institutional investors about the | | | | M. Shahidul Islam, |
| company's financial side. | | | | Company Secretary |
| DSE president Md Rakibur Rahman and local investors | | | | RAK Ceramics (Bangladesh) Ltd. |
| SAK Ekramuzzaman, who holds 10 per cent of RAK | | | | |