MJL Bangladesh to buy 12.5% Omera stake from Dutch FMO for Tk60cr

Infographic: TBS

Highlights

• MJL to acquire 27.75 million shares at Tk21.80 each
• MJL's share price rose 1.81% to Tk95.70 after the announcement
• Omera Petroleum is a 62.49% subsidiary of MJL
• FMO originally invested at Tk18 per share in 2015

MJL Bangladesh, the country's largest lubricant company, has decided to purchase a 12.5% stake in Omera Petroleum from Dutch development bank FMO to strengthen its holdings in the company.

The company will acquire 27,747,917 shares of Omera Petroleum from FMO at a rate of Tk21.80 per share, subject to regulatory approval. This means the publicly listed MJL will invest Tk60.49 crore to acquire FMO's stake.

The Dutch lender had originally invested in Omera at Tk18 per share in 2015.

The decision was made during MJL Bangladesh's board meeting on Wednesday and was publicised on the Dhaka Stock Exchange (DSE) yesterday. 

Following the announcement, MJL Bangladesh's share price rose by 1.81% to Tk95.70 per share at the DSE.

Omera Petroleum, a 62.49 %-owned subsidiary of MJL Bangladesh, was established in 2015 to cater to the country's growing demand for liquefied petroleum gas (LPG). BB Energy (Asia) Pte Ltd, Singapore, and Dutch FMO were the major foreign investors in Omera Petroleum, holding 25% and 12.5% stakes, respectively.

MJL Bangladesh PLC is a joint venture company between EC Securities Limited, a subsidiary of East Coast Group, and state-owned Jamuna Oil Company. In 1998, Mobil Corporation, later known as Exxon Mobil Corporation, decided to set up Mobil Jamuna Lubricants Limited in partnership with the Jamuna Oil Company.

Azam J Chowdhury, managing director of MJL Bangladesh, told The Business Standard that FMO supports sustainable private sector growth in developing and emerging markets. And, as part of that initiative, they had invested in Omera. 

However, they do not stay in these markets for the long term, he said.

"Once FMO sees that a company can stand on its own, they exit and reinvest in another market," Azam Chowdhury added.

Omera is engaged in the import, storage, bottling and distribution of LPG. The company has established an LPG plant to facilitate these operations, ensuring a strong distribution network across the country.

In 2019, Omera Petroleum had intended to raise Tk238.43 crore from the stock market through the book-building method to expand its LPG business. However, the Bangladesh Securities and Exchange Commission did not approve its IPO.

FMO's role in Omera

According to FMO's website, in 2015, the bank financed and invested in the development and construction of four LPG plants in Bangladesh with a total capacity of 100,000 tonnes per year. 

The total project cost was approximately $60 million. The funding was used for the construction of the main terminal, the three satellite plants and the distribution network. 

The main terminal is located in Mongla, near one of the country's principal seaports, where LPG is delivered before being redistributed to three satellite bottling plants in Dhaka, Bogra, and Chittagong. From there, it is supplied to private and commercial users.

In 2018, FMO participated in the capital increase of Omera, which was used to finance the further expansion of Omera.

MJL's half-yearly revenue boosts 28%, profit 30%

According to its financial report, MJL Bangladesh reported a 28% jump in its consolidated net revenue and a 30% increase in net profit during the first half of the current fiscal year, ending in December 2024.

During the July-December period, its consolidated net revenue rose to Tk2,289.87 crore, while net profit increased to Tk217.43 crore, compared to Tk1,787.06 crore and Tk167.05 crore, respectively, in the same period of the previous fiscal year.

At the end of December, its earnings per share (EPS) stood at Tk6.66, up from Tk5.01 during the same period of the previous year.

Meanwhile, in the second quarter, from October to December, MJL Bangladesh's net revenue grew by 20% to Tk1,122.41 crore, and net profit increased by 36% to Tk104 crore, compared to Tk936.61 crore and Tk76.34 crore, respectively, in the previous year.

Regarding its profit growth, MJL Bangladesh, in its financial report, stated that the consolidated profit increased slightly due to the profitability of its subsidiaries and associate companies.

In FY24, the company reported a profit of Tk271 crore and paid its shareholders a 52% cash dividend.