RAK Ceramics cleans up on Bangladesh IPO

Shares rise 3.5% after company's listing sets proceeds record

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RAK Ceramics bucked the gloomy trend in the initial public offering (IPO) market and investors were suitably impressed, pushing the stock sharply higher. Shares of the world's largest ceramics manufacturer gained 3.5 per cent to Dh1.45 on the Abu Dhabi Securities Exchange (ADX) yesterday, after having risen as much as 7 per cent during the day's trading.

The company, based in Ras al Khaimah, listed its Bangladeshi manufacturing unit on two stock exchanges in the south Asian nation last week and set the record there for IPO proceeds. Analysts saw the performance as a sign of confidence and recognition of RAK Ceramics as an international brand. "An IPO in such conditions is a job well-done. Hats off to RAK Ceramics to beat the market situation," said Ali Khan, the managing director and head of equities at the investment bank Arqaam Capital in Dubai.

The company offered 19.35 per cent of its RAK Ceramics Bangladesh to the public and retained a stake of 72.59 per cent. The offering was 15 times oversubscribed and raised US$258.6 million, it said. RAK Ceramics said a total of 34.51 million equity shares were offered at 48 Bangladeshi taka each after the price discovery in the book-building process. The shares began trading on the stock exchanges in Dhaka and Chittagong on June 13 and their price surged to more than 200 taka each. In Dhaka yesterday, the shares declined 3.7 per cent to 184 taka.

"RAK Ceramics launched the IPO to make the company debt-free and fund future projects in Bangladesh, where the company supplies up to 75 per cent of the domestic demand for sanitary ware and 25 per cent of demand for ceramic tiles," the company said in a statement on the ADX website. Although the parent company is traded on the ADX, it opted to list its Bangladeshi unit in its home country. RAK Ceramics has interests in five more companies in Bangladesh. It is also active in Saudi Arabia, Iran, Belgium, Switzerland, Italy, Australia and the UK.