CASE STORIES
- Merger Case Stories
- Debt Arrangement Case Stories
- Alternative Financing Arrangement Case Stories
- Corporate Advisory Service Case Stories
- Corporate Advisory Service Case Stories
Summit Group is one of the leading private sector conglomerates of Bangladesh, comprising more than twenty business units ranging from power to shipping to communications and currently generating 1,423 MW of electricity. Summit Power Limited (SPL), a subsidiary of Summit Group is the first Bangladeshi Independent Power Producer (IPP) in Bangladesh in private sector providing power to national grid.
Today Summit Power Limited owns and operates 13 (thirteen) power plants at different locations across the country having a total capacity of 482 MW of its own. The total capacity has now been 1,082 MW in which Summit Power Limited has direct/indirect operational association. This fast-growing company has set a mission to expand the company with a power generation capacity to the tune of a modest 20% of the electricity requirement in Bangladesh.
To increase the efficiency in operation, reduce the redundancy in operational expenses and increase the dividend distribution potential of the company the company intended to merge its 3 subsidiaries with the parent.
Among the 3 subsidiaries one was listed company, which has to be delisted if the merger is approved by the Hon’ble High Court. This create additional complexity both in operational side and regulatory affairs.
Valuation of the companies is another key consideration is this case. As the Transferee Company is listed company and one of the transferor company is listed, where the other two Transferor companies are non-listed, the valuation methodologies also have to be customized based on the considerations.
Valuation of the companies is another key consideration is this case. As the Transferee Company is listed company and one of the transferor company is listed, where the other two Transferor companies are non-listed, the valuation methodologies also have to be customized based on the considerations.
Based on our market experience, knowledge and the requirements of this project we designed and executed the work flow. To ensure the conformity of the valuation methodologies in line with the valuation standards we provided proper justification and reasoning, which supported the valuation principles used in this case. As corporate advisor we also helped the issuer in completing the compliance requirements and regulatory requirements. As issue manager of the said issue we completed the Capital issue process as part of the Amalgamation process.
- The merged entity became the single largest listed power generation company of the capital market of Bangladesh.
- Dividend paying capacity increased by ______
- Operational efficiency is achieved by diminishing the redundant activities.
LBSL began its operation as Vanik Bangladesh Securities Limited (VBSL) in 1997, with activities confined only within the Chittagong Stock Exchange (CSE) Limited. A year later, VBSL made a step ahead and introduced to the Dhaka Stock Exchange (DSE).
VBSL re-branded itself as LankaBangla Securities Limited (LBSL) in 2005 following a restructuring of the company. Currently, LBSL are the top stock brokerage house in Bangladesh holding the 1st position for 12 consecutive years in DSE and 13 consecutive years in CSE.
As lending to brokerage house is considered as capital market exposure for the banks in Bangladesh, typically banks aren’t that much interested to lend the brokerage houses. Moreover when the market goes through bullish period, the brokerage houses need more money supply to capture the growth but banks also want to increase their own investment in the capital market rather than lending to brokerage houses. This creates a unique problem for the brokerage house, which ultimately results in higher borrowing costs.
The objectives of LBSL was to create alternative financing sources to reduce the dependency on banks and financial institutions as well as reducing the borrowing costs.
As generally borrowing from banks have to pay on monthly basis, whereas due to the volatility of the capital market, the business of brokerage houses also fluctuates. This mismatch in cash flow increases system loss in financial management. Semiannual or annual payment structure will provided sufficient cushion for the brokerage houses.
- The market was experiencing a bearish trend.
- The turnover of the market was also lower than average.
- The level of confidence on the capital market of Bangladesh was not gaining momentum.
- For the 1st time in Bangladesh a brokerage house of Bangladesh is issuing Zero Coupon Bond.
- We designed a zero coupon bond with suitable repayment structure which provides sufficient cushion for the issuer and also ensure attractive investment opportunity for the investors.
- The zero coupon bond reduces the effective borrowing cost for the issuer.
- We targeted the corporate and high net worth individuals as potential investor group as this segment of investors are the highest beneficiary of zero coupon bond instrument due to differential tax implications.
- The financing cost of LBSL came down by 3%
- The semiannual repayment structure allowed for better financial management
- The alternative financing source created scope targeting growth in bullish period.
- Enhanced the brand image of LBSL
Summit Group is one of the leading private sector conglomerates of Bangladesh, comprising more than twenty business units ranging from power to shipping to communications and currently generating 1,423 MW of electricity. Summit Power Limited (SPL), a subsidiary of Summit Group is the first Bangladeshi Independent Power Producer (IPP) in Bangladesh in private sector providing power to national grid.
Summit Barisal Power Limited (SBPL) and Summit Narayangonj Unit II Power Limited (SNUIIPL) are two flagship companies of Summit Group engaged in power generation in Bangladesh. SBPL has generation capacity of ____ MW and SNUIIPL has generation capacity of ____MW.
Summit Barisal Power Limited (SBPL) and Summit Narayangonj Unit II Power Limited (SNUIIPL) are two flagship companies of Summit Group engaged in power generation in Bangladesh. SBPL has generation capacity of ____ MW and SNUIIPL has generation capacity of ____MW.
In accordance with the requirements of lenders of both SBPL and SNUIIPL, both the companies has to refinance their existing preference share with changes in rate of dividend, repayment structure and other changes in the terms and conditions.
Refinancing through issuance of preference share for repayment of previous preference shares is complex procedure in Bangladesh. As the company has to redeem the previous preference share and issue new preference with updated terms and conditions.
Also in this case, the lenders set specific time to complete the process and put mandatory bindings on this regard.
Also in this case, the lenders set specific time to complete the process and put mandatory bindings on this regard.
We applied for issuance of Preference share within a very short preparation for both the companies. As the requirements were filled properly the review process didn’t take much time and within 1 month we received the consent letter for issuance of preference share for both the companies. This was one key issue, as it allowed us to approach to potential investors with proposals for both SBPL and SNUIIPL. We structured the investment proposal in line with the requirements of the lenders and also suitable for the investors to invest.
- The requirement of the lender of both companies were met, as we successfully closed the subscription within the required time frame.
- The objectives of the companies were also met with better terms and conditions for the issuer.
PowerPac Economic Zone is a private export processing zone located in Mongla Port, Khulna. It is the first Special Economic Zone under PPP model. The site for the PowerPac economic zone has been identified as a land parcel of 205 acres that lies 40 km from Khulna city, 105 km from Jessore airport and 230 km from capital Dhaka.
It was the first qualification license among the 10 economic zones, four of which are modelled on public-private partnership and the rest six will be built by private entities. The final license will allow PowerPac to attract both foreign and domestic investors to set up their industries in the economic zone
The company got the initial prequalification bid for the Economic Zone. As part of requirement of receiving the final qualification bid the company has to submit Feasibility Study. We were appointed as Corporate Advisor to prepare this Feasibility Study of 1st ever PPP based Economic Zone of Bangladesh.
As we already mentioned that, this is the 1st ever PPP based Econnomic Zone of Bangladesh, there was no precedence of such project.
Also the Economic Zone concept is new in Bangladesh and Mongla Economic Zone was one of the initial economic zone in this suite.
Also the Economic Zone concept is new in Bangladesh and Mongla Economic Zone was one of the initial economic zone in this suite.
- We took the feasibility studies of other economic zone around the world as sample referenece.
- Considered the requirements of BEZA regarding the feasibility study.
- Customized the feasibility report with specific perspectives of all the stakeholders PowerPac, BEZA and other related authorities.
- Used our in-house research, analysis and market knowledge as well as innovative approach to complete the feasibility study of such pioneer project of Bangladesh.
- We have showcased that local companies has the capability of completing such feasibility study.
- The feasibility study was completed within the short time period and received the approval from BEZA without any hassle.
- The Economic Zone was inaugurated in the 1st phase along with several other Economic Zones.
Systems Solutions & Development Technologies Limited (SSD-TECH) is a renowned software development company operating in Bangladesh and in various countries across the globe. Since its inception in 2004, it has proved its excellence by providing solutions of superior quality to large and small enterprises, Banking and Non-Banking Financial Institutions and Telecom Operators. Later on, the company has changed its business model and entered in the VAS business. In VAS business the company provides VAS operation and also Platform operation to other VAS providers. The company also initiated ISP operation with unique business proposition. The ISP brand of the company “DOZE Internet” has already gained a specific customer segment in ISP business and the business growth is tremendous.
As part of the company’s long term objective of several funding from local and foreign investors and also making a valuation at Pre-IPO stage, the company appointed us as the Corporate Advisor for finding out the Enterprise value of the company.
The VAS industry is still at nascent stage and growth potential is high, which makes difficult to project the future revenue potential. Also the industry data and information is not available.
We considered the business outlook of the company in both VAS and ISP business.
The growth in internet usage and local content is key consideration in developing the projection of the company.
We critically evaluated the management’s vision, capability and quality of human resources as technical sector changes at fast pace and companies with visionary mindset supported by qualified human capital can only survive.
The valuation enhanced the brand image of the company and was able to attract interest from various stakeholders.
This also enhances the team moral of the company as employees were also able to understand the potential of the company and the value they are putting in this company.
This also enhances the team moral of the company as employees were also able to understand the potential of the company and the value they are putting in this company.