Lub-rref IPO Clears Hurdle

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The Bangladesh Securities and Exchange Commission last week approved the method by which Lub-rref will conduct its initial public offering, clearing the way for the lubricant marketer to hold its stock sale.

The company, which is based in Chattogram, Bangladesh, has not yet set a schedule for the offering but aims to raise 1.5 billion taka (U.S. $18 million). It plans to use the funds mostly for equipment that would help it expand but also to pay off existing debt.

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According to its Aug. 20 press release, the Securities and Exchange Commission authorized Lub-rref to conduct the offering using the book building method, in which the company invites institutional investors to submit bids for the number of shares and the prices they would be willing to pay for them. The company conducting the offering then offers stock shares to the public at a slight discount to that price.

Lub-rref has said that the IPO would allow it to significantly increase its production capacity and therefore to expand sales. Additional capacity would be for transformer oil manufacturing, viscosity improver solubilizing agents and hydraulic, turbine and engine oils.

According to the IPO prospectus, the company had 1.5 billion taka in revenue for the fiscal year ending June 30, 2019, up 11% from the prior fiscal year. Net profit after tax reached 207.6 million taka, down 2%. Diluted earnings per share was 2.08 taka, compared to 2.05 taka in the prior fiscal year.

In the prospectus, the company outlines its aspirations to eventually offer both virgin and rerefined base oil. It refers to a base oil refinery project in Bangladesh that would have capacity of 70,000 metric tons per year. The base oil group type is not specified. According to the prospectus’s executive summary, Bangladesh’s lubricant demand is 120,000 metric tons per year. The company estimated that the automotive sector accounts for 65%, industrial for 30%, marine an others for 5%.

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