A lot is going on in the financial market these days, with investors flocking Pakistan Stock Exchange (PSX) and exploring upcoming blue-chip Symmetry Group Limited (SGL). A potential turnaround has sparked interest in the tech firm’s listing next week after it delayed its Initial Public Offering (IPO) in February.
Now all set to go live on August 8, SGL will be the first listing of the new fiscal year 2023-24 (FY24) on the main board.
CEO and Co-Founder Sarocsh Ahmed of SGL, a digital technology and experiences company, told ProPakistani ahead of the IPO that the company aims to strengthen its holistic positioning in the market during this fired-up bull run and is very much prepared to go public.
The company plans to raise a minimum of Rs. 430.27 million in equity by selling 101.24 million shares to institutional and individual investors. The offering would be conducted through a 100 percent book-building method, with a floor price of Rs. 4.25 per share.
“Our initial target was to get listed in February 2022. But a few things changed and the market landscape of Pakistan took a drastic turn, making it near impossible for SGL to go public that year. During this period, we formed a new board of directors with some prominent and independent individuals like Musharraf Hai (ex-Unilever) and Najeeb Agrawalla (CEO 1Link),” Ahmed explained.
This, coupled with bringing in KPMG as auditors almost 5 years ago helped Symmetry achieve financial discipline and set the company’s books in order. “We are very much prepared to go public,” he added.
Strategy and Expected Margins
In response to a question on whether it was SGL’s strategic decision for an IPO at this time, he said as per the Securities and Exchange Commission of Pakistan’s approval which was granted in June, it was impossible to list on PSX in a window beyond 8-9 August. “The market is doing good, bulls have emerged so the timing couldn’t have been better”.
On whether the share price was too low for a tech IPO in this era, Sarosch said the company first favored a higher fixed price of Rs. 5.5 per share due to the market situation a few months back. “Later, we deliberated on a discounted rate for the listing and decided on a floor price of Rs. 4.25 per share, which translates into an FY23 P/E multiple of 6.38x, a huge discount as compared to the industry-weighted average P/E multiple of 11.48x”.
The discount is strategic and offers an upside to prospectus investors. “We see the share price rising by a maximum of 40 percent to Rs. 5.95 per share during the auction, allowing investors to find the best strike price. Hence, the discount,” he remarked.
Liquidity, Future, and Possibilities
Public forums have pointed out that SGL doesn’t sport a big topline like other similar and listed companies on the main board. Ahmed said the data speaks for itself but also underscored post-IPO plans that will boost SGL sales. “Our upcoming exports, and both old and new streams of revenue will definitely propel the topline to higher numbers. Projections are well-suited for current market sentiments and we at SGL see massive growth post-IPO,” he added.
On whether investors are wary of SGL’s pristine but ‘limited’ list of clients, he said, “We have some big companies like HBL, Jazz, and P&G with whom we’ve worked for a long, long time. Our relationships with clients go beyond contractual formalities. They don’t leave us, and we at SGL will stop at nothing to get more big-name players on board”.
As a bonus, Ahmed said Overseas Pakistanis can also apply through Roshan Digital Accounts.
Utilization of IPO Proceeds
SGL intends to raise Rs. 375 million to develop and launch various
digital IPs. The plan is to develop five independent IPs using in-house expertise, create new office space, procure new equipment, hire additional HR, etc.
The 5 IPs are:
- corral – performance: It is a comprehensive analytics platform powered by AI that provides unified Performance Visualization and Insights to identify Online Advertising performance across various channels
- CartSight: A platform with an AI engine that will provide an end-to-end solution for capturing and analysis of consumer data in real time.
- survit: An end-to-end AI-powered CSAT solution that enables organizations to measure service quality, customer satisfaction, and user experience.
- mobits: A platform to manage mobile marketing, reporting, and user engagement.
- Influsense.ai: A one stop shop AI powered influencer marketing solution
Overall, 60 percent of the raise is going towards the development of the aforesaid tools, while the remaining will be targeted for marketing campaigns to envision all SGL brands under a unified umbrella.
Book-Building
The book-building process is expected to commence on August 8-9, 2023, for institutional and high-net-worth individuals, and on August 17-18 for retail investors.
The book-building process will attract investors from a variety of backgrounds. Bidders will be able to submit bids for 100 percent of the issue size, with successful bidders receiving 75 percent of it in the first round, while retail investors will be offered the remaining 25 percent.
Superb
what is the minimum shares retails investors can buy ?