TRG on Thin Ice

June 25, 2025 (MLN): It never rains but it pours for TRG Pakistan. Just days after TRG Pakistan found itself at the center of an adverse courtroom verdict rattling investors’ and Management’s confidence, its Management walked a tightrope of words, choosing each response cautiously during a scheduled Analyst Briefing yesterday.

Since the verdict, the company’s stock has slipped from Rs62 to Rs53.60, before slightly recovering to Rs55.94.

The Management refrained from offering any comments on the court’s verdict, stating that the matter was still sub judice.

However, the Management confirmed plans to challenge the ruling in the Supreme Court, seeking redressal of “irregularities andinfirmities” in the High Court’s ruling.

The Management also declined to comment on the share buyback episode for similar reasons, especially while responding to queries regarding the loss on the purchase of its own shares through Greentree Holdings Limited.

Separately, AKD Securities, acting as manager to the tender offer, has begun returning pledged shares to investors under court directives, with the process expected to be completed soon.

Elections

In response to a question regarding board elections, it was stated that this remains a board-level decision, and any developments will be shared in due course.

IBEX & Afiniti

During the briefing, the management of the Company also walked stakeholders through recent developments across its portfolio companies, shedding light on a transformational restructuring at Afiniti, and a resilient performance by IBEX.

Operating in a customer experience (CX) industry facing global headwinds, IBEX managed to post a remarkable recovery, reporting strong financial metrics in the first three quarters of FY25.

Its revenue for the third quarter rose by 11% YoY, while expectations for full-year revenue remain around $540–545 million, which represents a 7% growth over last year.

This positive trend, driven by the company’s strategic expansion into new markets and verticals, also translated into a 6% rise in EBITDA to an estimated $70 million, the management added.

Despite broader CX industry challenges, particularly a drop in volume during FY24, IBEX’s adaptability and focus on high-growth geographies helped it outperform peers.

However, it was noted that TRG International (TRGI)’s shareholding in IBEX has now reduced to 13%, following the repurchase of approximately 3.56 million shares by IBEX in November 2024.

On the other hand, the story of Afiniti, however, has been more complex. Burdened by an unsustainable $500m debt raised between 2019 and 2020, the company completed a comprehensive restructuring in December 2024.

A consortium of lenders led by Vista converted nearly 50% of the debt into convertible preference shares, allowing Vista to gain a controlling stake.

TRGI also participated by investing $15min in the same instrument, yet its shareholding in Afiniti was diluted to 13%. This move, though reducing TRG’s control, enabled the company to retain a position on Afiniti’s board and preserve long-term book value.

Management emphasized that while demand in Afiniti’s Predictive AI segment has weakened, prospects hinge on ongoing investments in generative AI capabilities.

Afiniti IPO

Management clarified that there are currently no immediate plans to take Afiniti public as shifting market dynamics since 2021, particularly in the tech and private equity space, have made conditions less favourable for such listings.

With a new shareholding structure in place post-restructuring, any future decision regarding an IPO will now rest with Afiniti’s board, which is currently led by a majority from Vista.

Financial Performance

For the nine months of FY25, TRG reported a profit of Rs4.3 billion (EPS: Rs7.36), a sharp contrast to the Rs18.3bn loss (LPS: Rs30.67) during the same period last year.

This recovery was largely driven by valuation gains from IBEX’s strong stock performance and the increase in value of TRG shares held through Greentree, which is now one of the company’s significant stakeholders.

TRG’s long-term investment portfolio rose to Rs46.1bn in 9MFY25 from Rs40.5bn in FY23, up by 14%. That said, the downward revaluation of Afiniti due to its financial restructuring partially offset gains from IBEX.

Management acknowledged that TRG Pakistan, being merely a holding company, does not generate operational revenue and carries only overhead expenses.

No Dividends

With no cash directly available, the company will not be declaring any dividends until legal clarity is attained and a fund transfer mechanism from Greentree Holdings is established.

In closing, the management reiterated TRG’s strategic focus on tech-driven transformation. Both IBEX and Afiniti are actively investing in predictive and generative AI platforms, underlining a long-term vision that continues to anchor the company’s investment philosophy.

While the shareholding structure has shifted and legal uncertainties abound, the Management appeared committed to navigating these complexities while positioning its assets for sustainable growth.

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