Pakistan's IPO capital market raises record-breaking PKR20bn in FY21

June 30, 2021 (MLN): With a fast-tracking Pakistan’s economic growth post initial outbreak of COVID-19, Pakistan Stock Market (PSX) has seen the highest Initial Public Offerings (IPO) capital raising ever with a record amount of PKR 20 billion raised in the fiscal year 2021.

This also marks the highest number of capital raising transactions in 14 years -the last high was 12 transactions witnessed in FY07, a report by Arif Habib Limited (AHL) noted.

Companies lined up to take benefit of that positive sentiments with a series of eight equity IPO transactions that include 7 new listings: The Organic Meat Company, TPL Trakker Limited, Agha Steel Industries Limited, Panther Tyres Limited, Service Global Footwear Limited, Citi Pharma Limited and Pakistan Aluminum Beverage Cans Limited, and one preference share issuance i.e., Engro Polymer and Chemicals Limited.

It is pertinent to highlight the flush of liquidity in the market, with the order book for all IPOs generating a demand of PKR 44bn against the PKR 20bn raised, translating to a 2.2x oversubscription for new listings at the index, the report cited.

Despite the third COVID wave which infected thousands and killed many with strict restrictions, the PSX’s benchmark KSE-100 Index return has been 37% in the outgoing fiscal year.

The first company that went public this FY21 was The Organic Meat Company (TOMCL). It raised PKR 800mn at a strike price of PKR 20 per share against the floor of PKR 18 per share while the principal purpose of this IPO was to finance two offal processing facilities.

The Last IPO of the year remained the largest in terms of capital raised. Pakistan Aluminum Beverage Cans Limited (PABC), a manufacturer of aluminum beverage cans in Pakistan, raised PKR 4.6bn at a strike price of PKR 49 per share (floor price of PKR 35 per share).

Apart from the aforementioned, the report mentioned that a debt IPO was also executed during FY21. Bank Alfalah Limited issued a Term Finance Certificate (TFC) in denominations of PKR 5,000, offering a coupon rate of 9.03% p.a. with the purpose of hedging the issuer’s fixed-rate assets i.e. staff loans, consumer loan portfolio, etc. with fixed-rate liabilities. The bank raised PKR 11bn and utilized it to primarily invest in Government of Pakistan issued securities, the report added.

Hence, total capital raised via Debt plus Equity IPOs arrived at PKR 31bn in FY21. In addition to this, a total of 25 companies issued right shares in the outgoing year, raising PKR 50bn in the capital.

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