No limit to Best Holdings' IPO shares subscription

The Bangladesh Securities and Exchange Commission (BSEC) has lifted the bar in the initial public offering (IPO) applications of general investors for getting allotment of shares for the Best Holdings Limited — the owner of five star-ranked hotel Le Méridien.

Investors in Best Holdings' IPO can now apply for shares without any value restrictions, as the regulator has removed the standard Tk10,000 cap typically imposed for an investor on IPO applications.

According to the new guidelines issued by the BSEC, an investor applying for an IPO in the primary market needs to have a minimum investment of Tk50,000 in the secondary market.

Owing to the changes, the Dhaka Stock Exchange (DSE) has conducted an awareness programme with the representatives of the brokerage houses, and instructed them to follow the new guidelines.

In October 2023, Best Holdings got BSEC approval to raise Tk350 crore through an IPO under the book-building method from the capital market.

The IPO subscription will start on 14 January 2024, and continue until 18 January.

To apply for the company's IPO shares, Bangladeshi resident general investors will need to have a minimum Tk50,000 investment in matured listed securities, and non-resident Bangladeshis (NRBs) Tk1 lakh as on 3 January 2024.

Earlier, the electronic bidding for the company's shares took place between 20 November and 23 November, where cut-off price of the shares were fixed at Tk35 each.

Qualified and institutional investors including mutual funds will buy 25% of the company's shares at the cut-off price.

Individual investors will be able to buy the remaining shares at a 30% discounted price of Tk24 each.

The cut-off price is the price at which institutional investors have primary shares allocated for them in an IPO under the book-building method.

According to the company, Best Holdings will use 50% of the fund or Tk176 crore for building construction and other civil works, 33%, or Tk115.6 crore for repayment of existing liabilities, and around 13% for local machinery and equipment acquisition.

Best Holdings is in the process of raising fresh funds to build a resort at Bhaluka upazila in Mymensingh.

The cost of the total project, which will offer world-class hospitality outside the capital, is Tk1,586.91 crore, as per the prospectus. In this project, the IPO and the company's fund will contribute Tk755 crore and the rest will come from loans.