Best Holdings' IPO to raise Tk3.5b approved

The stock market watchdog of Bangladesh has approved of Best Holdings' proposal to collect Tk 3.5 billion through an initial public offering.

Best Holdings, the owning entity of Le Méridien Dhaka, will invest this money in extending hospitality business outside the capital, according to a press release issued by the Bangladesh Securities and Exchange Commission (BSEC).

Best Holdings will issue common shares to collect Tk 3.5 billion in equity capital. The share price of Best Holdings IPO will be determined through book building method.

Bidding among institutional investors will take place. After determining the cut off price general investors will get shares at a discount.

Best Holdings will invest this money in a project called The Muslin, a chain resort of Luxury Collection in Bhaluka. The project is around 75km from zero point of the capital.

Luxury Collection is a brand hotel and resort of Marriot International. The hotel will have 200 premier guest room, 14 studio king villa, four studio queen villa, one executive villa, one LM Villa, and one presidential villa.

According to the prospectus of Best Holdings, it will use Tk 1.77 billion out of Tk 3.5 billion for building and other civil work of the project. Tk 450 million will be used for purchasing equipment and another Tk 1.15 billion for repayment of existing liabilities.

The remaining 133 million will be used for covering IPO expenses.

Earlier this year, the regulator relaxed IPO rules for Best Holdings on three conditions to help the owning entity raise equity fund from the public.

The regulator delayed approving the IPO proposal submitted in October 2022, as the company converted its Tk 125-crore bonds invested by Agrani Bank into shares in June that year. The rules of the BSEC did not allow a company to apply for an IPO after expanding paid-up capital through cash.

The first condition to be met is that all shares of Best Holdings issued before the company's IPO would remain locked in for a period of three years from the first day of trading on the stock exchanges.

Secondly, the company will not issue shares further from the date of application --October 26, 2022 -- until the issuance of IPO shares.

The last condition is that the company will duly comply with the provisions of all relevant laws, including securities laws.

Currently, four companies are listed under the travel & leisure sector in the stock market. Best Holdings will be the fifth company.

According to the prospectus, Best Holdings has a net profit of Tk 1.3 billion for FY18. In FY19, it earned Tk 0.98 billion. In the years to FY22, the company secured Tk 0.93 billion, Tk 0.39 billion, and Tk 1.02 billion.

According to the press release, Best Holdings has net asset value per share of Tk 56.34 after revaluation in FY23. Without revaluation the net asset value per share is Tk 32.26.

The issue managers for the IPO are Shanta Equity Limited and ICB Capital Management Limited.

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