Best Holdings to offload share to raise Tk350 crore

Best Holdings Limited, the operator of five-star hotel Le Meridian at Nikunja-2 area of the capital, has planned to go public by offloading shares in the stock market to raise Tk350 crore for developing a new project the Muslin – a luxury collection resort in Bhaluka, Mymensingh.

The company will offload 10% of its total shares through the initial public offering (IPO) under the book-building method.

It will use 50% of the fund or Tk176 crore for building and other civil works, 33% or Tk115.60 crore for repayment of exiting liabilities, and around 13% for acquiring local machinery and equipment.

The cost of the total project, which will offer world class hospitality outside the capital, is Tk1,586.91 crore, as per the prospectus. In this project, the IPO and the company's own fund will contribute Tk755 crore and the rest will come from loans.

Meanwhile, the company's revenue jumped by 131% to Tk262.39 crore and profit by 159% to Tk101.75 crore in the fiscal year 2021-22.

Amin Ahmed, chairman of Best Holdings, told The Business Standard, "Foreign guests stayed in our hotel even during the Covid-19 pandemic. After lifting the restrictions, the number of guests in the hotel has increased significantly."

He said, "Foreign guests come to this hotel due to its close proximity to the airport. As a result, it remains always full."

The company had problems concerning loan repayment with various government banks. However, it later converted the debt into equity through bonds.

In November 2020, Best Holdings applied to the Bangladesh Securities and Exchange Commission (BSEC) seeking approval for issuing 4.35 crore shares at Tk65 each to raise Tk283 crore under the direct listing method as it has investments from government banks.

As the securities rules do not permit direct listing for private companies, it application was cancelled.

In June this year, it applied for raising capital through IPO; and completed the roadshow on 20 October in this regard.

Best Holdings, which is also a subsidiary of the Metro Group, was incorporated in 2006 and started business in 2009.

Currently, its paid-up capital is Tk925 crore, according to the IPO prospectus. It has two subsidiaries – Best Hotels Limited and Dhamshur Economic Zone Limited.

As per the company, Le Meridian, a state of art five-star hotel, is the major contributor of its revenue.

It also has two agricultural projects in Bhaluka and Noakhali, which contributes to its revenue.

As per the company officials, room revenue of Le Meridian grew by 364% to Tk76.72 crore, and food and beverage revenue grew by 123% to Tk76.59 crore.

Its competitor in hotel management are two listed firms in the stock market – Unique Hotel and Resorts, who operates the Westin, and Bangladesh Service Limited, the operator of InterContinental hotel. 

They also saw a significant growth in revenue in the first nine months of 2021-22 fiscal.

During the July-March of 2021-22 FY, Unique Hotel and Resorts saw a 105% and Bangladesh Service Limited 111% growth in revenue.

The revenue from the Westin increased by 99% to Tk91 crore while its room revenue grew by 195.64% and foods and beverage revenue by 63% over the same time.