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Energypac Power halted few minutes into transaction

Its share jumps 50pc, the highest allowable limit on debut


FE REPORT | January 20, 2021 00:00:00


Energypac Power Generation's trading was halted within a few minutes of transaction on the debut trading on Tuesday as investors rushed to buy its shares, but sellers were reluctant.

Only five tradeswere executed on the Dhaka Stock Exchange (DSE) on the debut trading day with trading volume of 805 shares as its initial public offering (IPO) share winners were unwilling to sell their stakes hoping for higher profit in future.

The company's share closed at Tk 46.50 each on the DSE, soaring 50 per cent, the highest allowable limit on its offer price of Tk 31 each.

On the Chittagong Stock Exchange (CSE), the company's share price also rose 50 per cent to close at Tk 46.50, after hitting the highest allowable limit. At the CSE, only one trade of 10 shares was transacted.

Market analysts said the investors showed their appetite for the new issue amid short-term speculation. But IPO shares winners were not interested to sell their stakes at low prices.

The price of the shares of the company could not go up further despite high demand from investors due to the imposition of circuit breaker on shares which made debut, said a merchant banker.

As per the new rules, price limit of a new company will remain open 50 per cent on issue price on debut day and the following day, price limit will remain open 50 per cent on closing price of debut trading.

In recent times, investors showed their appetite for the new issues amid short-term speculation. So,all the new issues created an 'irrational hype' among investors on the debut trading day, said the merchant banker.

Energypac Power raised Tk 1.50 billion under the book-building method by issuing a total of 40.30 million ordinary shares to expand its LPG business, repay loans and bearing the cost of the IPO process.

The stock market regulator -- Bangladesh Securities and Exchange Commission (BSEC) -- approved the company's IPO proposal on October 21, 2020.

Earlier the company completed electronic bidding and explored its cut-off price of shares - a requirement for going public under the book building method.

The cut-off price of Energypac shares had been fixed at Tk 35 each. However, general investors, including non-resident Bangladeshis, got IPO shares at a 10 per cent discount on the cut-off price of Tk 31 each.

Energypac's profits dropped more than 49 per cent year-on-year to Tk 66.48 million for in July-September, 2020 period because of the ongoing coronavirus pandemic.

The company's basic earnings per share (EPS) stood at Tk 0.44 for the period for July-September, 2020 which Tk 0.88 for the same period of the previous year.

However, post-IPO basic EPS for July-September, 2020 would be Tk 0.35.

The company's paid-up capital is Tk 1.90 billion, authorised capital is Tk 5.0 billion and the total number of securities is 190.16 million.

The sponsor-directors own 54.13 per cent stake in the company while institutional investors own 22.80 per cent and the general public 23.07 per cent as on June 30, 2020.

LankaBangla Investments is the issue manager of the company's IPO process.

Founded in 1995, Energypac Power has diversified business in the sectors like power generation, energy, infrastructure, commercial automotive, industrial and commercial building and assembling and manufacturing.

The company has also entered the LPG market with the brand name G-Gas. G-Gas is the company's one of the pioneering brands in the energy sector, which currently offers household, commercial, bulk LPG and autogas solutions across the country.

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