Regal Automobile Industries to raise Rs800 mln to invest in EV assembly line

January 12, 2022 (MLN): Regal Automobile Industries Limited has applied for listing on Pakistan Stock Exchange (PSX), seeking to raise Rs800 million to invest in the Electric Vehicle assembly line, a notice issued by the bourse said today.

As per the details disclosed in the prospectus, the company shall be issuing 25 million ordinary shares (23.3% of the total post-IPO paid-up capital) using the 100% book building method at a floor price of Rs32/- per share (including a premium of Rs22.0/- per share) with a maximum price band of up to 40% i.e. Rs44.8 per share.

The principal purpose of the issue is to invest the entire amount raised at the floor price in the Electric Vehicle assembly line.

The bidders in the book building shall be allowed to place bids for 100% of the issue size and the strike price shall be the price at which 100% of the Issue is subscribed. However, the successful bidders shall be provisionally allotted only 75% of the issue size i.e. 18.75 million shares and the remaining 25% i.e. 6.25 million shares shall be offered to the retail investors through the general public portion.

In addition to this issue, the company has also signed agreements to sell 7.15 million ordinary shares (6.7% of the total post-IPO paid-up capital) at a price of Rs35.2/share which is at a premium of 10% to the floor price through pre-IPO private placement. These funds will also be allocated to the EV assembly line.

For the aforesaid issue, Arif Habib Limited is the lead manager and book-runner while Habib bank Limited and Bank Al Habib Limited are the bankers to the book building portion of the Issue.

The draft offer for sale document has been placed on the PSX website for seeking public comments. All concerned are requested to provide their written comments on the draft offer for sale document, if any, to the listing department latest by Thursday, January 20, 2022, the notice quoted.

Regal Automobiles Industries Ltd was incorporated as a Public Limited Company on 19th May 2016. The Company was formed to set up an automotive assembly under the ambit of the Automotive Development Policy of 2016-2021.

During the year 2016, the Government of Pakistan announced the Automobile Development Policy (2016-2021) which provided tax incentives to new entrants in order to help them establish manufacturing units in Pakistan and effectively compete with the existing three assemblers naming (i) Indus Motor Company, (ii) Pak Suzuki Motor Company & (iii) Honda Atlas Cars (Pakistan) Limited.

The objective was to enhance customer welfare and boost competition in the Automobile Industry of Pakistan. As part of its growth policy and avail the concessionary duty incentives, the Sponsors of Regal applied for the license of car assembly through Engineering Development Board and eventually established the Company as a Green Field Industrial Undertaking availing the reduced custom duty for five years overall the product portfolio from the start of its manufacturing.

Apart from the new equity issuance through Pre-IPO & IPO, the company will be allocating the internal cash towards the EV assembly line, the company said.

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