PSX in 2024: Big Year for IPOs With Rs. 8.4 Billion Raised So Far

The IPO market in Pakistan has seen a significant revival in CY24, supported by an improved economic landscape and a tremendous performance by the stock market.

According to a report by Arif Habib Limited, key macros including downward inflation trajectory, monetary easing, and stable currency alongside successful negotiation of the IMF Extended Funding Facility amounting to USD 7 billion have created an attractive environment for equity offerings, drawing investor interest and facilitating robust capital raising activities on the Pakistan Stock Exchange (PSX).

KSE-100 Index surged by 42.4 percent during CY24TD, reflecting an overall positive sentiment and renewed investor interest. Also, the KSE-100 index profitability skyrocketed by 24.4 percent during FY24 to a historic high level of Rs. 1.6 trillion.

The positive momentum in the stock market has encouraged companies to tap into public equity markets. A total of five (5) IPO transactions and two (2) have been concluded in 2024, as compared to only one (1) transaction last year.

In 2024, the main board welcomed new listings including Secure Logistics (SLGL), TPL REIT Fund-I (TPLRF1), International Packaging (IPAK), Fast Cables (FCL), and BF Biosciences (BFBIO). Meanwhile, Mughal Energy (GEMMEL) and Burj Clean Energy (GEMBCEM) have been added to the GEM board.

Capital raised via IPOs this year reached its highest since CY21, underscoring a strong appetite for new investment opportunities in the market.

Total demand for IPOs in 2024 amounted to Rs. 13.0 billion, with Rs. 8.4 billion raised, resulting in a 1.6x oversubscription.

In addition to IPOs, 10 companies issued the right shares, raising Rs. 18.3 billion, showcasing a consistent demand for capital expansion across various sectors. In CY24, four companies were listed at PSX through a merger, as compared to three companies last year. The four companies are 1) Stylers International, 2) LSE Capital, 3) UDL International, and 4) Big Bird Foods.

Equity Initial Public Offerings (IPOs) during CY24

• Secure Logistics Group Ltd. (SLGL): Secure Logistics Group Ltd, formerly known as Asia Capital Partners (Pvt.) Limited, was established in 2013 and serves as the holding company for four fully owned operational subsidiaries: 1) SecurLog (Pvt.) Limited, 2) Secure Track (Pvt.) Limited, 3) Fist Security (Pvt.) Limited, and 4) TDM (Pvt.) Limited. These subsidiaries are engaged in logistics, vehicle fleet management, security services, and commodity trading/indenting, respectively.

In August 2016, Asia Capital Partners (Pvt.) Ltd. was rebranded as Secure Logistics Group Limited. The company has transformed into an integrated provider of logistics, asset monitoring, tracking, and security services, leveraging a unique set of horizontal synergies. There are notable synergies between the logistics and vehicle tracking operations, while the security services also enhance both the vehicle tracking and logistics sectors.

• International Packaging Films Ltd. (IPAK): The company specializes in producing Biaxially Oriented Polypropylene (BOPP) films. In 2017, IPAK acquired a production line with an annual capacity of 41,360 tons, producing films of various grades and thicknesses.

IPAK began manufacturing five-layer films in Sep’17, with Tri-pack as its main competitor. To expand its product range, IPAK launched Cast Packaging Films (Private) Limited (CPAK) for CPP film production, which began operations in 2021 with a capacity of 9,900 tons per annum. Additionally, IPAK is establishing PETPAK Films (Private) Limited, focusing on BOPET film production, with a capacity of 41,920 tons per annum, which began operations in Feb’24.

• Fast Cables Ltd. (FCL): Fast Cables is a manufacturer of electrical cables and conductors in Pakistan. With an annual production capacity of 8,400 metric tons for copper and 13,800 metric tons for aluminum products, the company operates two plants in Lahore.

Fast Cables utilizes technologies such as a Catenary Continuous Vulcanization (CCV) Line and an Aluminum Alloy plant to produce durable products like Aerial Bundle Cables and All Aluminum Alloy Conductors.

The company’s products have been approved by reputable local laboratories and institutions, and it offers a wide range of cables, including low and medium-voltage options. Additionally, it has pioneered the production of Greeley Conductors and received type test certification from VEIKI-VNL in Hungary.

• BF Biosciences Ltd. (BFBIO): BF Biosciences Limited is a joint venture between Ferozsons Laboratories Limited and Argentina’s Bagó Group, incorporated in 2006. The company operates in the pharmaceutical industry, focusing on the import, manufacturing, marketing, and distribution of biotech products. BFBIO is a pioneer in biotech manufacturing in Pakistan, producing life-saving medications for conditions like cancer, chronic kidney disease, and hepatitis C.

The company’s facility in Lahore has been operational since 2009 and features two manufacturing lines. Line I, established in 2009, focuses on producing low-volume biological products, particularly for hepatology. In 2024, BF Biosciences expanded its capabilities with Line II, which includes advanced technology for both biological and non-biological products, including vaccines. This expansion positions the company to effectively meet the growing market demand in both segments.

In CY24, Rs. 8.6 billion was raised through debt instruments, compared to Rs. 31.2 billion in CY23.

1. JS Bank Limited – Tier II: JS Bank Ltd (JSBL) has issued a TFC of Rs. 3,500 million. The purpose of the instrument was to contribute towards JSBL’s Tier II Capital for complying with the Capital Adequacy Ratio requirement prescribed by the SBP. The tenure of the instrument is 10 years and carries a profit rate of 3M KIBOR+200bps.
2. BankIslami Pakistan Limited – Ehad Sukuk II: BIPL issued a SUKUK in denominations of Rs. 5,000, offering a profit rate of base rate plus a maximum margin of 2.50 percent. The issue size was Rs. 1,000 million and The proceeds of the issue will contribute toward the Issuer’s additional Tier I Capital for CAR as per guidelines set by SBP. The funds so raised will be utilized in the Bank’s financing and investment activities (General Pool) as permitted by its Memorandum & Articles of Association.
3. TPL Properties Ltd: TPLP issued, secured, privately placed, medium-term, term finance certificate, amounting to Rs. 1,575 million, to finance the company’s working capital requirements and settlement of short-term borrowing of the company. The tenor was 12 months and carrying a profit rate of 3M KIBOR+200bps. Profit will be paid on a quarterly basis and TFC will be redeemed in bullet at the expiry of the tenor.
4. Kashf Foundation: Kashf Foundation issued Pakistan’s first gender bond of amount Rs. 2,483 million, offering a profit rate of 3M KIBOR plus 1.50 percent p.a. The purpose of the issue is micro-infrastructure-finance loans directed towards the welfare of women via entrepreneurship, business support, flood rehabilitation, education, and home rehabilitation. Arif Habib Limited & The Bank of Punjab were the lead advisors and arrangers.