AFC Health’s IPO approval suspended over Fortis dispute

Mostafizur Rahman | Published: 21:18, Nov 25,2020 | Updated: 19:51, Nov 26,2020


The Bangladesh Securities and Exchange Commission on Wednesday suspended the IPO approval of AFC Health Limited due to the company’s dispute with India-based Fortis Healthstaff Limited and Escorts Heart Institute and Research Centre Limited.

The BSEC issued the suspension letter on Wednesday and sent it to AFC Health Limited, a senior BSEC Official told New Age.

The two Indian institutions provide various surgery and management services to AFC Health.

Earlier on October 13 in 2020, the service providers requested the BSEC to cancel the IPO of AFC Health Limited saying that the IPO prospectus contained several false and fraudulent representations and statements.

The BSEC official said that the commission had asked the company to settle the issue with Fortis and Escort as soon as possible but the company had failed to do so.

In addition, the commission noticed that AFC Health is a connected company of AFC Agro Biotech Limited, a listed company on the stock exchange.

AFC Agro declared no dividend for the year ended on June 30, 2020 and it never declared cash dividend after being listed in 2014, the official said.

Another connected company of AFC Health, Active Fine Chemicals, was also not performing well on the stock market.

Shareholdings of sponsor-directors dropped to 12.04 per cent (as on October 31, 2020), and share prices of the company were at Tk 13 each.

Therefore, the BSEC decided to keep the IPO of the company on hold until further notice.

The BSEC approved the IPO of AFC Health on  September 16, 2020 to raise Tk 17 crore despite the country’s premier bourse, the Dhaka Stock Exchange, placing reservations about the company’s IPO.

In a letter, Fortis and Escorts said that the agreement executed by AFC with EHIRCL and FHL were limited to Khulna and Chattrogram only, but AFC Health used their brand names in Cumilla and Jashore, which was a material breach of the agreements and an illegal act amounting to infringement of intellectual property of EMU.

They said in the letter that there had been several payment defaults by AFC since 2017 due to which the entity had been inoperative since 2018.

Since AFC failed to make the payments, it has no right to use the trade names and brands of EHIRCL and FHL without prior consent or permission.

Fortis and Escort have, therefore, urged the BSEC to initiate appropriate action and investigation against AFC for the ‘falsifying’ statements related to the public offer.

AFC Health raised almost Tk 140 crore through issuance of placement shares in the period between 2014 and 2018 which increased its paid-up capital to Tk 145 crore.

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