Borak Real Estate Limited, a sister concern of Unique Group, is set to raise a capital of Tk 400 crore from institutional investors, corporates, and high-net-worth individuals through an initial public offering (IPO) under the book-building method.
To this end, the real estate firm will conduct a roadshow Wednesday in the capital.
The company will raise the fund to cement its financial strength and create future opportunities for its investors.
Under the book-building regulations, the roadshow is a requirement before the price discovery of a company's shares.
Book building is a process through which an issuer attempts to determine the price to offer for its security based on the demand from institutional investors.
The price of an IPO share is determined through automated bidding joined by financial institutions. The shares are then opened for the IPO participants at the cut-off price.
The principal operations of Borak Real Estate are acquiring land to develop and constructing commercial and residential buildings to sell or to earn rentals.
The company also purchases land for the construction of multi-story apartment buildings, shopping malls, and office spaces.
Borak Real Estate constructs buildings on a fully owned or sharing basis by virtue of an agreement with the owners of the land. The company has two RMC units located at Patira-Khilkhet, Dhaka, and Nillnagar-Konabari, Gazipur, in which the company sells Ready Mix Concreate (RMC).
The company's revenue grew by a compound annual growth rate (CAGR) of 9 per cent from June 2019 to June 2023.
The company faced multiple challenges in its operation during the Covid-19 pandemic, which caused a complete shutdown of businesses. Despite such an extraordinary event, Borak Real Estate recovered significantly in June 2021, registering a year-over-year growth of 74 per cent in revenue.
The revenue growth continued until June 2022, but it dipped by 21 per cent in the recent financial year that ended in June 2023. The reason behind this fall was that the cost of construction materials and raw materials related to ready-mix concrete increased substantially due to the Russia-Ukraine war and the depreciation of the taka against the US dollar.
The company's profit after tax remained steady, except in the financial years of June 2021 and June 2023. In June 2021, its profit after tax fell by 30 per cent due to an increase in financial expenses and a decrease in non-operating income.
In the latest financial year of June 2023, the profit after tax jumped to Tk 652 crore due to consideration of fair value gain on investment property.
A senior official at the company said Borak Real Estate plans to use Tk 100 crore of its IPO fund to repay its high-cost bank loans and the rest to implement new construction projects.
BMSL Investment Limited and Swadesh Investment Management Limited will be the issue managers for the company's IPO.
Borak Real Estate was established in 1991. The company converted into a public limited company on August 28, 2010, and split its share value from Tk 100 to Tk 10 on July 12, 2010.
Its Managing Director Mohd Noor Ali, who is also the key sponsor, has more than 44 years of business and entrepreneurial experience.
Noor Ali is a prominent entrepreneur in the country, having interests in real estate, the hospitality and tourism sectors, the ceramic industry, power plants, manpower exports, banking services, housing finance and investment, human resource development, land development, and many other businesses.
He is the managing director of Unique Hotel & Resorts PLC and the Unique Group, a renowned business conglomerate in Bangladesh, and the chairman of Unique Meghnaghat Power Limited.
He is the only Bangladeshi entrepreneur who has pioneered setting up a 5-star hotel (The Westin Dhaka and Sheraton Dhaka) in the private sector and the Prestigious own brand, Hansa Residence, in Uttara.