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Delta Hospital Limited has requested stock market regulator Bangladesh Securities and Exchange Commission to cancel its initial public offering as low pricing by the institutional investors set the cut-off price of its shares at Tk 11 each.
The face value of the company’s shares is Tk 10 each.
The pricing would bar the company’s sponsor/directors to comply with mandatory individually 2 per cent and jointly 30 per cent shareholding rules as the company has to offload more shares to raise intended Tk 50 crore, company officials said.
Delta Hospital on Tuesday sent a request letter to the BSEC and the country’s two stock exchanges to discard its IPO proposal.
It was the first time that any company requested to cancel its IPO after bidding, officials of Dhaka Stock Exchange said.
They said that the company was unhappy about the unexpected bidding price.
The DSE on May 31 disclosed that the cut-off price of Delta Hospital’s shares had been set at Tk 11 through electronic bidding by the eligible institutional investors.
The hospital intended to raise a fund worth Tk 50 crore from the capital market using the book building method to expand its business and repay bank loans.
Its paid-up capital was Tk 33.21 crore and authorised capital Tk 100 crore as of June 30, 2019.
Delta Hospital company secretary Al Mamun told New Age that the company had to decide to cancel its IPO as it would not be able to comply with regulatory requirements of minimum shareholdings if it floated shares at the price the bidding process had set.
He said that due to the low cut-off price, post-IPO shareholdings of the company’s seven out of 10 directors would fall short of 2 per cent mandatory minimum shareholding requirement.
So, the sponsor-directors’ joint shareholding would also fall below 30 per cent, he said.
BSEC officials said that the commission would decide on the unprecedented issue soon.
Within legal jurisdiction, the commission may cancel the IPO or disapprove the company’s request.
As per the bidding, the institutional investors wanted to buy shares worth Tk 31.54 crore at the cut-off price of Tk 11 each.
The individual investors are allowed to purchase the rest of the shares worth more than Tk 18.4 crore at Tk 10 each, a 10 per cent discount on the cut-off price.
The electronic bidding under the book building method of the IPO took place for 72 hours – from March 22 to March 25.
During the period, a total of 88 eligible institutional investors offered different prices to buy the company’s shares.
Among them, the highest 14 bidders bid at Tk 15 each share of the company.
The highest bidding price was Tk 46 a share and the lowest was Tk 11 a share.
The BSEC allowed the company to explore its cut-off price on February 11.
