United Power finally secures $100 million foreign investment deal

United Power Generation and Distribution Company Limited (UPGDCL) has finally secured the deal for a $100million foreign investment, one that was thwarted earlier by the securities regulator.

In a mandatory disclosure to the stock exchange, UPGDCL said one of its subsidiary companies, United Mymensingh Power Limited (UMPL), will sell 1 crore shares of its total holding of 43.12 crore shares of UPGDCL at the prevailing market price in the block market within the next 30 working days.

Wall Street-based emerging market fund operator GEM Global is the buyer, sources from different corners engaged with the deal confirmed to The Business Standard.

The private sector power generation giant — listed with both the bourses of Bangladesh — will receive approximately half of the investment chunk upon the transfer of 1 crore existing shares in the block market. 

The share purchase agreement allows the parties to finalise the deal in phases this time, brushing aside the regulatory approval. Earlier this year, a similar deal with the same investor was blocked by the Bangladesh Securities and Exchange Commission (BSEC).

According to BSEC’s Substantial Share Acquisition rules, if any stake equal or larger than 5 percent of a listed company’s total shares is to be bought or sold, the parties must apply for prior approval from the securities regulator. 

• Wall Street-based GEM Global will buy 1 crore UPGDCL shares under the agreement 

• The share purchase agreement this time does not require the regulator’s approval. 

• The transaction may take place at a rate equal to some average price of UPGDCL stocks traded at the DSE and CSE.

As the intended 1 crore share is equivalent to less than 2.1 percent of total UPGDCL shares, the declared transaction this time does not need prior regulatory approval. 

Earlier in April, the regulator found that some elements of the share purchase agreement were not aligned with local regulations. BSEC also mentioned lack of investor’s details as a reason for blocking the deal.   

UPGDCL stocks subsequently plummeted to Tk277 from Tk418. 

Meantime, UPGDCL officials stay tight-lipped when approached by the press about the price per share in the declared transaction. The Chairman of United Group, Hasan Mahmood Raja, sounded happy after securing the investment.

However, sources hinted that the transaction may take place at a rate equal to the average price of UPGDCL stocks traded at the Dhaka Stock Exchange and the Chittagong Stock Exchange. The stock on Tuesday closed at Tk393 per share with a face value of Tk10 each. 

The incoming investment was facilitated by Blue Mount Capital, which acted as the international corporate finance advisor.