The Pakistan Stock Exchange (PSX) has witnessed eight initial public offerings (IPOs), including two GEM Board offerings, in 2021. These are the record highest offerings after 2015, which have raised Rs. 20 billion, according to a research report by Topline Securities.
In 2015, there were eight offerings, totaling Rs. 116 billion, raised through primary and secondary issues including the Government of Pakistan’s secondary offering of Habib Bank (HBL), which had added Rs. 102 billion. Throughout the year, the market was enthralled by these offerings, which were all oversubscribed.
Octopus Digital (OCTOPUS) had the highest return of 46 percent after its debut, followed by Citi Pharma (CPHL) with a return of five percent. On the other hand, Pak Agro (GEMPAPL) and Panther Tyres (PTL) saw 35 percent and 33 percent declines respectively.
Interestingly, despite the benchmark KSE-100 index’s lackluster performance in 2021, which witnessed a two percent decline in PKR terms and a 12 percent decline in dollar terms, these offerings attracted a large amount of investor interest in 2021.
Outlook for 2022: If the macroeconomic situation in Pakistan stabilizes after the resumption of the International Monetary Fund (IMF) program, Topline Securities suggests that the market will continue to see new offerings in 2022. Still, there are a few IPOs in the pipeline as companies plan to expand their capacities, however, their outlook will depend on the overall economic and market conditions in 2022.
On the mainboard, six companies raised funds. These companies represented various sectors including Auto, Footwear, Technology & Communication, Pharmaceutical, Packaging, and Logistics.
Panther Tyres (PTL): PTL was the first IPO of 2021 and it came at a strike price of Rs. 65.8. The company offered 40 million shares and raised Rs. 2.6 billion to fund its tire capacity expansion.
Service Global Footwear (SGF): SGF raised Rs. 2.1 billion by selling 41 million shares at Rs. 53.2 strike price. The goal of this IPO was to acquire a 19 percent shareholding in Service Long March Tyres (PVT) Limited (SLM), bringing SGF’s stake in SLM to 51 percent. SLM is the first business in Pakistan to introduce modern TBR [Truck & Bus Radial] tire manufacturing technology.
Citi Pharma (CPHL): CPHL raised Rs. 2.3 billion by selling 73 million shares at a strike price of Rs. 32. The goal of this issuance was to increase the company’s paracetamol capacity and expand its product line. In addition, the corporation planned to grow its formulations business and build a state-of-the-art 50-bed hospital in Gulberg, Lahore.
Pakistan Aluminum Beverage Cans Limited (PABC): PABC raised Rs. 4.6 billion via a 94 million share sale at a strike price of Rs. 49. The main goal of this Offer for Sale was to get PABC listed on PSX and expand the company’s shareholder base. The money was given to Ashmore, a UK-based company that planned to sell 26 percent of its 51 percent ownership in the auction.
Air Link Communication Limited (AIRLINK): The largest IPO of 2021 was AIRLINK, which raised Rs. 6 billion from investors by selling 90 million shares at a strike price of Rs. 71.5. The goal of this IPO was to raise money for more retail stores and to provide working capital for future expansion.
Octopus Digital Limited (OCTOPUS): OCTOPUS was perhaps the most popular IPO of the year, with over Rs. 30 billion worth of bids received against a total offering size of Rs. 1.1 billion (27.3 million shares offered at Rs. 40.6). The company needed money to create intellectual properties (IPs) and offer numerous digital dashboard platforms, so it needed to raise money. It was the best-performing IPO of the year, with a 46 percent return.
SME Listings
Companies began offering shares through the GEM Board, which resulted in significant growth for PSX. The GEM Board’s goal was to promote SMEs, greenfield projects, and technology businesses to list on the exchange and raise finance. Previously, SMEs found it difficult to list on PSX, but with fewer regulatory criteria, the GEM Board witnessed two listings in 2021.
The two listings on the GEM Board were Pak Agro Packaging (GEMPAPL) and Universal Network Systems Limited (GEMUNSL).
Pak Agro Packaging Limited (GEMPAPL): GEMPAPL, Pakistan’s first GEM Board listing, raised Rs. 198 million by selling 8 million shares at a strike price of Rs. 24.75 per share, raising Rs. 198 million. The goal of this IPO was to increase fish-net manufacturing capacity by 600 MTPA while also meeting working capital requirements.
Universal Network Systems Limited (GEMUNSL): The first e-commerce and tech-enabled logistics company to be listed on PSX was GEMUNSL. The company raised Rs. 446 million by selling 6.9 million shares at a price of Rs. 65 each, for a total of Rs. 446 million. The goal of this IPO was to raise capital to expand the company’s national network and invest in technology.
