Dalda Foods is engaged in the business of manufacture and sale of edible oils and fats, snacks and tea whitener. The Company is considering to raise fresh equity for financing proposed expansion and their holding company, DFL Corporation Private Limited intends to divest partial shareholding from Dalda Foods.
The Issue of Dalda Foods shares will be carried out through a combination of Initial Public Offering and Offer for Sale. The total Issue size is 82,500,000 million shares out of which DFLC will divest 52,500,000 million shares (15.9% of post-Issue Paid-up Capital of the Company) and the remaining 30,000,000 million new shares (9.1% of post-Issue Paid-up Capital of the Company will be issued to the investors.
The fresh equity from the IPO will be utilized for making capital expenditure on Phase II seed extraction plant to increase seed crushing capacity by an additional 500 tons per day to meet future demand.
Dalda Foods has already invested PKR 844 million in oil seed extraction factory which was commissioned in 2013 and currently, it has a production capacity of seed crushing of 300 tons per day.
The proposed expansion will improve cost efficiencies, enable increased utilization of locally grown oil seeds and reduce impact of foreign exchange volatility thereby generate additional profits that will help fund future business opportunities.
The total expansion cost, including incremental working requirement of the expansion, would be PKR 3,000 million out of which PKR 2,550 would be raised through the proceeds from IPO. The breakup of funds utilization above is based on subscription of Floor Price of PKR 85/- per share.
To expand its operations, Dalda Foods Limited announced its decision of holding an Initial Public Offering (IPO) in a notification sent to the Pakistan Stock Exchange (PSX).
Dalda has decided to issue 82.5m shares via a book-building process at the floor price of Rs85 per share. The company stated that the money raised via the IPO would help it in expanding the Phase-II seed extraction plant which will enlarge its seed crushing capacity by additional 500 tonnes a day.
This will allow Dalda to raise around Rs7b of equity via its IPO.
The notification read “The proposed expansion will improve cost efficiencies, enable increased utilization of locally-grown oil seeds, reduce impact of foreign exchange volatility and generate additional profits that will help fund future business opportunities.”
Dalda’s shares will offered by a mix of IPO and offer for sale. DFL Corporation Private Ltd has been engaged to offer 52.5m ordinary shares which is 15.9pc of post-issue paid up capital. The rest of the 30m shares equivalent to 9.1pc post-issue paid up capital are being issued by the company itself, the notification read.