The principal activity of the company is to set up power plants for generation and supply of electricity
Baraka Patenga Power (BPPL) will utilise a portion of its initial public offering (IPO) proceeds worth Tk 144.34 crore to invest in two of its subsidiaries, and become one of the largest players in the country’s private sector power generation.
The principal activity of the company is to set up power plants for generation and supply of electricity. The 50MW capacity plant located at Patenga in Chittagong began its commercial operation on May 4, 2014.
Subsidiaries of the BPPL, the Karnaphuli Power (KPL) and the Baraka Shikalbaha Power (BSPL), have already started commercial operation after implementing two heavy fuel oil-based independent power producer power plants, with generation capacities of 110MW and 105MW respectively.
“Our mission is to become the largest power generating company in the private sector by developing more power plants across the country,” said Gulam Rabbani Chowdhury, chairman of Baraka Patenga Power.
The private sector now dominates Bangladesh’s power generation to a great extent.
Earlier, on December 31, 2020, Baraka Patenga Power’s bid to raise Tk 225 crore from the public received the green light from the Bangladesh Securities and Exchange Commission.
Apart from Tk 144.34 crore, the rest of the fund will be used to repay loans and bear the expenses of the IPO process.
The bidding to discover the cut-off price of shares of the company’s Tk 225 crore-initial public offering begins on February 15 for 72 hours.
The exercise is part of the book-building method that the power generation company chose to raise funds from the public.
The company published a notice in newspapers to invite investors, normally large-scale buyers and fund managers to submit bids on the number of shares that they are interested in buying and the prices that they would be willing to pay.
The book is built by listing and evaluating the aggregated demand for the issue from the submitted bids.
After the bidding, the cut-off price will be decided. Retail investors will get the shares at a 10 per cent discounted price.
The lion’s share of the IPO fund would be used in equity investment in Karnaphuli Power and Baraka Shikalbaha Power to settle the deferred obligations for gen-sets procurements, the BPPL chairman also said.
“Both the companies, otherwise, would have to look for alternative sources of financing to meet such deferred obligations, which might be much costlier resulting in lower profitability,” he said.
Baraka Power, the parent company of Baraka Patenga Power, is already listed on the bourses since 2011.
Baraka Patenga Power holds 51 per cent shares in both the two companies, whose main role is to generate and supply electricity to the national grid.
In its 2019-20 financial year that ended on June 30, the company logged in Tk 67.4 crore as profit, up a staggering 1239 per cent.
After the repayment of long-term debt of Baraka Patenga Power with a portion of the IPO proceeds, the company's profitability would increase, he added.
Baraka Patenga Power intends to play a big role in the government's target to ensure electricity for all by 2021, through installing more power plants, Chowdhury said.
For the first time in the power sector in Bangladesh, a desulphurisation plant was introduced to the project to reduce sulphur emission to an acceptable level, said Monzur Kadir Shafi, managing director of Baraka Patenga Power.
Due to the incapacity of the distribution line, currently two of its subsidiaries are not running with full capacity.
"After May 2021, we will be able to run both the plants with a full capacity which will increase the revenue significantly," Shafi added.
As per BSEC, the company can declare only cash dividends for the next five years from the date of issuance of consent letter over its IPO.
To be more transparent and to save the general shareholders’ interest, companies appointed independent directors who are renowned in financial sectors.
Zahrul Syed Bakht, one of its independent directors, is also a director of Progressive Life Insurance Company.
Bakht is a fellow member of ICMAB and an associate member of CMA of Ontario, Canada.
Abul Quasem, a former executive director and deputy governor of Bangladesh Bank, is also an independent director of the company, as well as an independent director of Bank Asia.
Apart from these, Helal Ahmed Chowdhury, a former managing director of Pubali Bank, is also on the board of BPPL as a representative director from Baraka Power.
The stock market regulator also directed the company to hold 51 per cent shares of its subsidiary companies at all times, which they are maintaining.
Such a condition of the regulatory body would be good for the general investors, market insiders said.