PHOTO: AFP
This was the second extension in the last two days. As per original plans, the book-building process was to be carried out only for two days (June 6-7).
“The book-building has been extended to attract bids for shares equivalent to the [PSX] shares on sale,” lead book-runner Arif Habib Limited Chairman Arif Habib told The Express Tribune.
PSX had invited bids for 160.29 million shares from high net-worth individual and institutional investors under the book building process. It, however, received bids for only 133.08 million shares at the strike price by the time book-building process got completed on Thursday.
The received bid size was 16.97% less than the targeted one at 160.29 million shares, which is 20% of the total issued shares at 810.45 million.
PSX would offer only 120.22 million shares (75% of 160.29 million shares) to high net-worth individuals and institutional investors at the strike price. While, remaining 40.074 million shares (25% of 160.29 million shares) would be offered to retail investors at the same price later on.
However, the expression of interest from high net-worth individuals and institutional investors should be equivalent to or higher than the total number of shares on sale. This is done to remain on the safe side, as in case retail investors do not opt to subscribe the shares set aside for them the leftover would be offered back to the successful high net-worth individuals and institutional investors of the book-building, it was learnt.
Strike price
“We have determined the strike (sale) price at Rs28 per share, which is the floor price,” Habib added.
In the next stage, PSX shares will be listed at its own trading platform. The floor rate was the price at which PSX divested its 40% (320 million shares) stake to a Chinese consortium through competitive bidding in December 2016. The transaction has earned the brokers Rs8.96 billion ($85.74 million).
According to the laws in place, the PSX has to divest a total of 60% shares (about 480 million) of the issued 100%, or over 800 million shares, by the end of current month.
The divestment will complete the process of PSX corporatisation, demutualisation and integration.
Earlier in January 2016, the three stock exchanges of the country namely Karachi Stock Exchange (KSE), Lahore Stock Exchange and Islamabad Stock Exchange were integrated into the Pakistan Stock Exchange.
Originally, 200 brokers of the erstwhile KSE were the owners of PSX. Earnings from the divestment will go to these brokers only.
The divestment would segregate the PSX management from the broker community, which is an international practice to keep the management away from brokers’ influence and let the stock market perform independently.
Published in The Express Tribune, June 9th, 2017.
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