Dubai: RAK Ceramics, one of the world's leading ceramics manufacturers, Sunday said it has received collections of more than $258.6 million (Dh949 million) in an initial public offering by its Bangladesh subsidiary, setting a record for IPO collections in the country.
"We went for the IPO due to the government's regulation. As per the Bangladesh Government's rule, we have to go public once the turn-over hits a certain level," Dr. Khater Massa'ad, CEO of RAK Ceramics, told Gulf News.
"We will utilise the money to repay debts and enhance our market share."
The company has a 30 per cent share in Bangladesh's ceramic tiles market, producing 15 million square metres per year.
Pricing mechanism
RAK Ceramics, which has been operating a joint venture in Bangladesh since early 2000, has also become the first company in Bangladesh to launch its IPO as per the Dhaka Stock Exchange recommended book building process, a modern pricing mechanism for IPOs introduced in March last year.
The public portion of the IPO was around 15 times oversubscribed, setting another record as the highest oversubscription in Bangladesh for an issue size greater than $5 million (Dh18.4 million).
RAK Ceramics also set a new standard in the country for the highest number of IPO applications, with 1.59 million. About 19.35 per cent of the shares were placed in the IPO and RAK Ceramics UAE retains 72.59 per cent of the post-IPO share holding of the company in Bangladesh.
The company also said the listing process for its Bangladesh subsidiary is now complete with the commencement of trading on the Dhaka Stock Exchange and Chittagong Stock Exchange (CSE).
"RAK Ceramics launched the IPO to make the company debt-free and fund future projects in Bangladesh, where the company supplies up to 75 per cent of the domestic demand for sanitaryware and 25 per cent of demand for ceramic tiles," the company said in a statement.
Market capitalisation
RAK Ceramics offered 34.51 million equity shares at a face value of 10 taka each, which were priced at 48 taka per share after the price discovery in the book building process.
The shares began trading on June 13 on the DSE and CSE and on the first day the price rose above 200 taka per share, creating a record market capitalisation of over $650 million. IDLC Finance was the lead issue manager for the IPO, and BRAC-EPL Investments Ltd was the joint issue manager.
