GPH Ispat’s Strategic IPO Initiative

GPH Ispat Limited, a premier steel producer in Bangladesh, has unveiled plans to secure $150 million through an initial public offering (IPO) on the Hong Kong Stock Exchange. The company aims to allocate these funds to construct a new production facility, thereby boosting its manufacturing capabilities.

Approval and Advisory Services

The GPH Ispat board sanctioned this strategic move on January 23, according to a press release. Complementing its global expansion strategy, the IPO will help increase the company’s operational reach. For expert guidance through the IPO process, GPH Ispat has engaged PricewaterhouseCoopers Ltd. in Hong Kong and Price Waterhouse & Co. Chartered Accountants LLP in India.

Engagement with Stakeholders

Leading the company’s efforts, Group Chairman Mohammed Jahangir Alam will head a senior delegation to Hong Kong this week. They plan to engage with The Stock Exchange of Hong Kong Ltd, Altus Capital Ltd, and Lego Corporate Finance Ltd to further discuss the IPO.

Market Expansion and Funding Use

The company expects that its listing on the Hong Kong Stock Exchange will solidify its international market position and open up new avenues for growth and investment. This strategy should also boost Bangladesh’s exports.

Chairman Alam has clarified that the IPO’s proceeds will finance the new plant, capable of producing 500,000 tonnes of billet and rod each year. The project’s total cost stands at $185 million, with $150 million raised through the IPO.

IPO Process and Financial Strategy

Although the IPO process has just begun and might take up to a year, Alam remains optimistic about its success. He attributes his confidence to the company’s robust dividend payments of 10 percent in 2024 and 5 percent in 2023. He also noted that the Hong Kong stock market’s vast size compared to Bangladesh’s offers a more feasible environment for such a significant capital raise.

Alam also pointed out the disadvantages of bank loans due to their high interest rates and short repayment terms. This situation makes equity funding through the IPO a necessity.

Business Sustainability

Increasing GPH Ispat’s annual production from 10 lakh tonnes to 15 lakh tonnes is essential for maintaining business sustainability, Alam emphasized.

Financial Performance

Since its 2012 listing on the Dhaka Stock Exchange, GPH Ispat reported a profit of Tk 28.75 crore in the last quarter of 2024, showing a drop from Tk 36 crore in the same period a year earlier.

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Source: The Daily Star