Popular Pharma to go public

Popular Pharmaceuticals, an insulin manufacturer in Bangladesh, plans to go public by using the book building method to raise Tk 70 crore for its business expansion and bank loan repayment.

Of the IPO proceeds, Tk 44 crore will be used for machinery procurement, Tk 23 crore for bank loan repayment and the remaining Tk 3 crore for IPO expenses.

“We want to expand our production capacity, especially the tablet and capsule manufacturing units, to cater to growing demand,” said Kazi Mohammed Badruddin, director, finance and accounts of Popular Pharmaceuticals, which recorded 15 percent growth in sales a year over four years.

The drug manufacturer will hold a roadshow for institutional investors at Sonargaon Hotel on October 24 as part of its plan for the initial public offering.

Eligible investors such as merchant banks, asset management companies, stock dealers, banks, financial institutions, insurance companies, alternative investment fund managers and other institutions approved by the securities regulator will join the event.

A roadshow is a requirement under the book building regulations before the price discovery of a company's shares.

Book building is a process through which an issuer attempts to determine the price to offer for its security based on demand from institutional investors.

The price of an IPO share is determined through automated bidding joined by financial institutions.

The shares are then opened for the IPO participants at the cut-off price. The method was suspended and then revised by the regulator following the 2011 market crash.

IDLC Investments, the issue manager of the IPO, will display the drug maker's fundamentals to eligible institutional investors during the roadshow.  Popular Pharmaceuticals has a paid-up capital of Tk 120 crore. Its half yearly earnings-per share stood at Tk 0.96 at the end of June this year, while the net asset value per share was Tk 35.12.

The Popular Pharmaceuticals factory is located on six acres in the Tongi Industrial Area. It started commercial operations in 2005, and now holds about 2 percent of the total pharma market, which is worth around Tk 15,500 crore.

Apart from supplying to the local markets, it also exports to 26 countries.

At present, 28 companies are listed on the stockmarket under the pharmaceuticals and chemicals category, which accounts for around 16 percent of total market capitalisation.