Star Ceramics withdraws IPO application

Star Ceramics Limited -- a joint venture company between Lebanon based Star Investment S.A.L and Bangladeshi promoters -- has recently withdrawn its application filed with the Bangladesh Securities and Exchange Commission (BSEC) for approval to get listed into the stock market to go public.

A BSEC source confirmed that the company applied to opt out of the IPO process in May last and it was allowed formally.

And, it appears that the company shied away from the process as its foreign investor is embroiled in a money laundering investigation, according to an official of the Bangladesh Financial Intelligence Unit (BFIU).

The Beirut based Star Investment, founded by Lebanese-Swiss national Dr Khater Massaad, was a major stakeholder in the Star Ceramics, which in 2014 transferred its entire 43.5 percent holding to locally registered Star Bangladesh Holding Limited.

Star Bangladesh Holding -- that came in place of Star Investment in the board of Star Ceramics -- is believed to be owned by Dr Massaad’s son Bernard Gilbert Massaad.

A Bangladeshi engineer named Syyed Ahmed is now representing the company at the Star Ceramics.

Dr Khater Massaad has been convicted by a court in the United Arab Emirates (UAE) for embezzling $1.5 billion of public funds during his service in the UAE based Ras Al Khaimah Investment Authority (RAKIA) as its chief executive officer (CEO).

And the investment, originally made by the Star Investment in the Star Ceramics, is alleged to be part of that illegal money of Dr Massaad.

Sixty-six-year-old Massaad is currently the CEO of Star Industrial Holding, a group that owns and operates businesses in countries like Bangladesh, India, Saudi Arabia, Nigeria and Ethiopia.

And it is alleged that the firm, too, has been set up through illegal funds.

Dr Massaad, a PhD holder in geophysics, also owns a real estate holding company -- Rakeen Development -- which too operates in Bangladesh.

According to a credible source at the BSEC, the UAE has recently made a query about the money laundering involving Star Investment.

This might be the reason why the firm no longer feels comfortable to get listed into the stock exchange, said the BFIU official on condition of anonymity.

When contacted, a high official of the Star Ceramics said he was unaware of any investigation into money laundering to be reason for their falling back from stock market.

He, instead, blamed the slow IPO process on the BSEC.

“We intended to go public for business expansion. But due to slow progress in the IPO process we had to rethink the entire plan for business expansion and capital accumulation,” said Ajay Kumar, chief financial officer of the Star Ceramics.

Earlier on March 29 last year, the tiles and sanitaryware manufacturer arranged a road show at a city hotel to let investors know about itself and its business prospects.

Then it filed an application to the BSEC for its approval to be listed in the stock market for accumulating Tk60 crore from investors through the book building method -- an IPO process in which qualified institutional investors determine primary share prices through bidding.

According to initial disclosures, Tk43.31 crore, of the total IPO proceeds, would be used for expansion of its sanitaryware plant and the rest for repayment of bank loans and spending for IPO formalities.