Mumbai:India’s largest producer of coconut hair oil, Marico Ltd, on Wednesday announced an initial public offering, or IPO, for its Bangladesh subsidiary, which will list on the Dhaka and Chittagong exchanges. Marico is looking to raise at least $2 million (Rs9.78 crore at current rates) through the IPO, which will make it the first Indian firm to have a listed subsidiary in Bangladesh.
Marico’s Milind Sarwate unveils the Bangladesh IPO strategy
“The amount raised is not very large and we don’t need the money,” said Milind Sarwate, head, human resources and strategy, at Marico. The main objective of the listing was to give its Bangladeshi arm a “local flavour”, he said, adding: “It’s more about visibility and branding.”
Marico Bangladesh Ltd has built a sizeable business in the seven years it has been in that country, with sales of Rs212 crore in 2008-09, and has been growing at a compounded annual growth rate of 70% for the past three years. The parent group had revenue of Rs2,388.4 crore for the fiscal year ended March 2009, with overseas businesses contributing 15%.
Marico will sell 1.49 million shares, or 5% of the subsidiary’s equity capital, at 90 taka (about Rs65) per share in August, the company said in a statement to the Bombay Stock Exchange (BSE). Taka is the currency of Bangladesh.
Marico’s stock on BSE closed on Wednesday at Rs80.70, a minuscule gain of 0.3%. The BSE’s bellwether Sensitive Index, or Sensex, ended at 13,769.15 points, 2.83% below the previous day’s close.
Analysts tracking the company were taken by surprise, given the small amount to be raised and because the operations in Bangladesh do not require any significant capital infusion.
One analyst with a domestic brokerage, who didn’t want to be named, said the money could be planned for “some acquisitions there”.
The Bangladesh capital market, unlike India’s, has no free pricing structure and is similar to what India had until the late 1980s, in which companies, under the Controller of Capital Issues, had to sell shares at low forward multiples.