GBB Power’s IPO subscription put off

SEC asks the firm to sort out license problem
The Securities and Exchange Commission (SEC) Thursday postponed the IPO (initial public offering) subscription of GBB Power as the company has not yet fixed its license problem, officials said.

Officials said the SEC made the decision after the company failed to submit key papers to the securities regulator concerning its power production license from the government.

The GBB has a RPP (Rental Power Plant) license from the energy regulator and also struck a deal with the state-owned Power Development Board (PDB) to supply electricity to national grid, sources said.

In October the company sought to raise Tk 820 million under the fixed price method from the stock market by offloading 20.5 million shares with face-value at Tk10 each plus Tk30 premium.

The SEC gave consent to the IPO on October 18 on conditions that the firm would submit necessary documents before the start of its subscription from December 18, an official said.

“Unfortunately, GBB has failed to show the IPP license document to us. The SEC had no choice but to postpone the IPO subscription until further notice,” he added.

Source said a company can generate electricity for a certain span of time, which may be three years, with a RPP license.

But officials said the regulator can’t allow a company to go public without an IPP license, as the firm will face problem to produce power after the expiry of the RPP license.

Experts have raised concern over the move by some RPPs to raise fund from the capital market, as these firms are likely to wind up operations once their license period ends.

When asked, a top SEC official said the regulator has asked the GBB Power to furnish full details of its contract with the PDB and the energy regulator.

“We will not allow the company to start subscription before we see all the papers. We will also talk to the government regarding the issue,” he said.

When asked an official of the IDLC Finance, the issue manager of GBB Power, said the company’s license is a “pending” issue.

“The company is likely to get the IPP license very soon. We don’t see any problem here,” the official said.

Meanwhile, the company moved to the High Court seeking an order so as to get an IPP license from the Bangladesh Energy Regulatory Commission (BERC).

The High Court delivered a verdict last month in favour of GBB Power. But the BERC appealed against the ruling in the Supreme Court, saying the HC order needs further clarification.

Source: The Financial Express, December 16, 2011