Bangladesh lubricant marketer Lub-rref began the second half of its initial public stock offering last week, opening its sale of shares to the public after an initial phase that was open to select investors. The company expected to raise a total of 1.5 billion taka (U.S. $17.8 million) to be used for expansion and debt repayment.
The IPO was to offer a total of 45.2 million shares, half of which were previously sold to select investors at a price of TK 30 each. The other half were to be offered to individuals for TK 27 per share beginning Feb. 2.
Shares are being listed on both of Bangladesh’s bourses, the Dhaka Stock Exchange and the Chittagong Stock Exchange.
Lub-rref, which is based in Chittagong, plans to spend TK 980 million of the proceeds to buy equipment that will allow it to increase production. The company operates its own blending plant and markets lubricants under its BNO brand.
It claims to currently holds a 5% stake of the country’s lubricant market but aims to increase that share to 20%. According to the prospectus for its IPO, the capital infusion will allow it to begin filtering and recycling electrical transformer fluid and to offer several new products or to expand production of existing ones, including hydraulic fluids, viscosity modifiers, turbine oils and engine oils.
The company said that 85% of Bangladesh’s lubricant demand is currently met by imports, and that it believes this creates substantial opportunity for a domestic supplier.
The remaining proceeds would be used to pay off existing debt.
Lub-rref said it also plans to eventually build a base oil plant.