Summit Power International started pre-deal investor education for an initial public offering of shares on the Singapore Exchange (SGX) this week, paving the way for what could be the first Bangladesh company to list in the Lion City.
Sources familiar with the situation said the independent power producer's Reg S and 144A IPO will consist of new company shares only and could raise about $300 million. The deal will feature a 15% over-allotment option for existing shareholders to sell secondary shares if the deal is oversubscribed by a "significant amount".
If it goes ahead, a Summit Power listing would boost SGX efforts to attract a more varied range of businesses by being the first major non-investment trust IPO since homegrown recruitment firm HRnetGroup's deal in June last year.
Perhaps more importantly, the IPO will strengthen SGX's position as a regional fundraising hub – an initiative adopted by former chief executive officer Magnus Bocker and incumbent CEO Loh Boon Chye.
Over 40% of Singapore-listed companies are already incorporated outside of the city, according to SGX. However, some of its neighbours like Indonesia and Vietnam are actively launching new initiatives to enhance the competitiveness of their respective local exchanges, so Asean companies now have more choice when deciding where to list.
Bangladesh isn't a member of the Association of Southeast Asian Nations (Asean) but has been looking to deepen its trade and economic ties with the neighbouring Southeast Asian trade bloc.
Independent power producers in the region have tended to list more on domestic stock exchanges over the past two years. They include Thailand's Banpu Power and Gulf Energy and Indonesia's Cikarang Listrindo.
Summit Power CEO Ayesha Aziz Khan has said the company had considered selling shares on other exchanges such as Malaysia, Dubai and New York but picked Singapore to help the company better access global investors.
Summit Power is the energy business of Summit Group, Bangladesh's largest conglomerate with businesses spanning shipping, international trade, and communications. The company owns and operates 13 power facilities in Bangladesh with a total contracted capacity of 482 megawatts -- equivalent to about 9% of the country's total installed capacity of as of the end of last year.
It counts General Electric, International Finance Corporation, South Korea's Daelim Energy, and Saudi Arabia's Islamic Development Bank among its existing shareholders.
FIND THE POWER
Summit Power will be trying to raise capital at a time when Bangladesh is looking to expand its power capacity to support record economic growth and sustain the country's transformation into a manufacturing powerhouse, particularly in the garment sector. Bangladeshi economic growth accelerated to 7.28% in fiscal year 2016/17, official data shows.
Bangladesh is the world's second-largest clothing manufacturer behind China, with international brands such as Nike, H&M, Zara, and Gap all producing their products there.
To help with the shift over from an agriculture-based economy, Bangladesh needs increased power supply and improved transmissions. At a conference in 2016, local experts told FinanceAsia the country was likely to have to increase its overall power capacity to 24 gigawatts (GW) by 2021 and 40GW by 2031 from about 12.5GW in 2016, providing a great opportunity for local power producers.
Summit Power has said it aims to raise $1 billion on international capital markets to fund expansion. Apart from the upcoming IPO, Summit Power has raised about $80 million from two syndicated loans through its subsidiaries Summit Barisal Power and Summit Narayanganj Power. The transaction was named FinanceAsia's Best Bangladesh Deal last year.
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