Securities regulator cancels Delta Hospital’s IPO

The stock market regulator Bangladesh Securities and Exchange Commission (BSEC) has cancelled the Initial Public Offering (IPO) application of Delta Hospital Ltd.

The regulator also directed Dhaka Stock Exchange and Chittagong Stock Exchange to return the bidding money of institutional and qualified investors within five working days.

The commission took the decision at a weekly meeting on Thursday.

Earlier, the company authorities decided to withdraw the IPO as they did not get the desired response to their shares in the book building method.

The decision was taken at the 208th meeting of the company's board of directors on June 1. After that, the company applied to the commission on June 2.

After getting a letter from the company, the BSEC issued a letter to the both bourses to hold onto the money of the recently-held Delta Hospital's bidding.

The cut-off price of Delta Hospital Ltd's shares has been determined at Tk11 through electronic bidding.

Qualified and institutional investors were supposed to buy 50 percent of the company's shares – worth nearly Tk31.54 crore – at the cut-off price.

The electronic bidding, under the book building method of the IPO, took place for 72 hours – from 5 pm on April 5 till 5 pm on April 7.

During this period, 88 institutional and eligible investors offered different prices to buy the company's shares. 

The highest bidding price was Tk46, and the lowest was Tk11. The cumulative value of the total bidding was over Tk32.40 crore.

The company's cut-off price was supposed to be declared two months ago. However, the schedule was changed due to the declaration of government holidays.

Earlier, the BSEC allowed Delta Hospital to explore the cut-off price of its shares through electronic bidding. The company set a target to raise Tk50 crore through an IPO.

The company will utilise Tk31.09 crore to procure equipment, Tk16.66 crore to repay bank loans and Tk2.25 crore to meet the IPO expenses.

The company is engaged in general medical treatment plus cancer diagnosis, treatment and management in Bangladesh's private sector. 

In the 2018-19 financial year, it had Tk65.33 crore in revenue. 

The issue manager for the company is Prime Finance Capital Management Ltd, while ICB Capital Management Ltd is the registrar to the issue. 

The company started off in 1989 as Delta Medical Centre. In 2007, the company changed its name to Delta Hospital Ltd.

The hospital has two units, one in Mirpur and another in Uttara.  

The proposed project envisages setting up of a modern specialised hospital with a capacity of 150 beds. The initial cost of the proposed hospital project has been estimated at Tk185.22 crore.