The bidding for eligible investors (EIs) to explore the cut-off price of shares of Lub-rref (Bangladesh) Limited, a local lubricant producer, will begin October 12 at 5:00pm.
The Chittagong-based lubricant company's shares bidding through electronic subscription system (ESS) of the exchanges will be continued until 5:00pm on October 15, according to an official disclosure on Tuesday.
The valuation report submission period for eligible investor through ESS will start at 10:30am on October 18 and continue till 10:30am on October 20.
Each eligible investor who intends to participate in the electronic bidding for the company's shares shall maintain a minimum investment of Tk 10 million in listed securities as on the end of October 4 as per the (Public Issue) Rules, 2015, said the disclosure.
The stock market regulator allowed the lubricant company to explore its cut-off price on August 20 - a requirement for going public under the book building method.
The local lubricant company will raise a capital worth Tk 1.50 billion from the capital market.
The IPO proceeds will be used for expanding its existing refinery plant with an aim to meet the growing demand for lubricants from both home and abroad and repay some expensive bank loans.
To finance the expansion, around Tk 980 million will be funded through initial public offering (IPO) proceeds, which would enable the company to capture 20 per cent market share, from the existing 8.0 per cent.
The company is also set to invest Tk 4.0 billion to establish the country's first state-of-the-art base oil refinery with an aim to meet the growing demand for lubricants from both home and abroad.
The sector has huge potential for growth in Bangladesh as the local lubricant market is mostly import based.
"Around 85 per cent of total demand is supplied through imports and foreign brands dominate the domestic market. Lub-rref wants to break the domination of foreign brands and make Bangladesh self-reliant," said Mohammed Yousuf, managing director of Lub-rref (Bangladesh).
Of the total investment, Tk 1.20 billion would come from equities and return earnings while the rest will be financed through foreign loans.
Alongside the construction of a new base oil refinery at the Julda Industrial Theme Park in Chittagong, the company will expand its present factory and fit it with the means to produce a higher grade of lubricant products.
The new project, being established right on the brink of the Karnaphuli river, will have an annual production capacity of about 70,000 tonnes.
Having secured all 25 certificates required to break ground, the project will be developed across 16 acres of land and is expected to be complete within the next two years.
As a part of its plans, Lub-rref will gradually set up a tank terminal, berth operating jetty, bitumen plant, hydrogen plant and power plant in the area as well.
Luf-rref, whose products are branded as BNO Lubricants, recently introduced Nynas technology based transformer oil and nano technology based lubricants to minimise carbon emissions and ensure engine longevity.
The lubricants company makes 60 per cent of products with responsibly recycled lubricants while the remaining 40 per cent is made out of imported base oils.
As of the fiscal year that ended on June 30, 2019, the company's earnings per share stood at Tk 2.08, while the five years' weighted average EPS was Tk 2.23.
The net asset value per share of the company, with a Tk 1.0 billion paid-up capital, was Tk 31.92 with the revaluation surplus of assets.
NRB Equity Management is working as the issue manager to company's IPO process.
Incorporated in 2001, the company commercially launched its manufacturing plant in 2006.
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