GPH Ispat eyes $150 million Hong Kong listing to expand production
The funds raised will be used to establish a new plant with an annual production capacity of 5 lakh tonnes of billet and rod
GPH Ispat Limited has announced its intention to raise $150 million through an initial public offering (IPO) on the Hong Kong Stock Exchange to finance its new project aimed at expanding production capacity.
The country's one of the leading steel manufacturers made the decision to pursue the listing with one of the largest stock exchanges in Asia during its board meeting held on 23 January.
To ensure a smooth listing process, the Chattogram-based company has appointed PricewaterhouseCoopers Ltd of Hong Kong and Price Waterhouse & Co Chartered Accountants LLP of India as advisory partners.
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Additionally, a delegation led by GPH Ispat's Managing Director Mohammed Jahangir Alam will visit Hong Kong from 4 to 6 February to engage in discussions with key stakeholders.
These include officials from the Stock Exchange of Hong Kong Limited, issue manager Altus Capital Limited, and underwriter Lego Corporate Finance Ltd.
Jahangir Alam told The Business Standard, "The funds to be raised will be used to establish a new plant in Chattogram with an annual production capacity of five lakh tonnes of billet and rod.
"The estimated cost of the project is $185 million, with $150 million expected to be raised through the Hong Kong listing."
He said the listing process is still in its early stages and could take between six months to a year to complete.
Alam highlighted two primary reasons for opting for an overseas listing. First, the local stock exchanges lack the capacity to raise such a substantial amount of capital. Second, securing loans for the project is not feasible due to unfavourable terms.
Local banks typically offer loans with high interest rates and a maximum tenure of 5-6 years, while foreign banks, although offering longer tenures of up to 12 years, require repayment in foreign currency – a significant risk given the current economic climate.
"We need equity funding, which is why we are turning to the Hong Kong Stock Exchange," Alam explained. He emphasised that equity financing is a more viable option compared to debt.
Its share closed at Tk20.70 on the Dhaka Stock Exchange on Monday.
