Pakistan market (PSX) saw just one initial public offering (IPO) in 2023, with a meager Rs. 435 million raised.
This is the lowest amount raised in a year in the past decade and half of the previous record low of Rs. 800 million seen in 2013, according to Topline Securities.
In terms of the number of IPOs, PSX has yet again seen a single IPO after 2019. This is in sharp contrast to the previous 5-year and 10-year average of 4 IPOs/year.
Topline attributed this bad IPO trend to macroeconomic instability, coupled with the looming threat of default, cheap valuations, and political uncertainty discouraging equity investment.
The single IPO that the PSX saw this year was of Symmetry Group (ticker: SYM) on the main board. This is Pakistan’s first publicly listed digital technology company with a focus on the digitalization of consumer-centric functions of organizations. The company offered 101.24 million shares at a strike price of Rs. 4.3/share, raising Rs. 435 million in August 2023 with an oversubscription of 1.58x.
Globally, a similar trend has also been seen where IPOs have dried up. As per Ernst & Young (E&Y), a total of 968 IPOs were witnessed till 9M2023 raising US$101bn compared to 1,018 IPOs raising US$ 148 billion in the same period last year. This is attributed to rising macro challenges, tighter liquidity, and higher cost of capital.
Benchmark KSE-100 index in 1H2023 was up by only 3 percent in PKR while down 19 percent in US$ with an average daily traded volume of 163 million shares and an average daily traded value of Rs. 6 billion.
However, in 2H2023 to date, the index witnessed a sharp recovery and is up by 51 percent in PKR and 52 percent in US$ with average daily traded volume in the cash/ready market improved to 377 million shares and Rs. 12 billion.
This sentiment if maintained is likely to be capitalized by companies wishing to access external capital; which will lead to an uptick in companies applying to be listed at the PSX in 2024.
A new shorter IPO process has recently been introduced in Pakistan. Where 14 working-day limit has been placed for granting of regulatory approval to the listing application and prospectus by SECP, coupled with a 15-day limit on PSX for a post-approval procedure for listing. This standardization will also help more companies raise funds through IPO in 2024.