Three IPOs held in 2017, eight expected next year

Several offerings delayed due to underperforming stock market

KARACHI: Pakistan equity markets witnessed three Initial Public Offerings (IPOs) in 2017 (excluding Modarabas), while eight IPOs are expected in 2018, according to a Topline Securities report.

Companies raised Rs8.6 billion through three IPOs in 2017 compared with Rs4.2 billion raised with the same number of IPOs in 2016.

The outgoing 2017 turned out to be a tale of two halves for the KSE-100 Index. The first half saw a bull run fuelled by MSCI-EM inclusion euphoria where the market rallied up to a peak of 52,876 points on May 24, 2017 with a year-to-date gain of 11%.

However, subsequently the situation deteriorated drastically. Pakistan’s weight in MSCI-EM turned out to be lower than expected while foreigners sold instead of buying. Moreover, the federal budget was unfavourable and Panama Leaks investigations led to disqualification of Pakistan’s prime minister.

These factors culminated in the KSE-100 Index shedding a whopping 25% from its peak and taking year-to-date returns to -17%. After five years of strong gains during 2012-2016 (where the KSE-100 index returned 33% or 29% in dollar terms), the market posted a significant decline in 2017.

Previously, the market lost 6% in 2011 while in crisis year of 2008 it lost 58%. Due to deteriorating investment climate and some regulatory setbacks, some IPOs scheduled for 2017 were also delayed.

Inbox Business Technologies, a Dawood Group-owned software house that provides managed IT services, aims to issue 45.4 million shares (39% of post IPO capital) at a floor price of Rs30 per share for investment in project assets and fulfilling working capital needs.

Dalda Foods’, a cooking oil brand, issue consists of 82.5 million shares (25% of post IPO) at a floor of Rs85 per share, of which 30 million are being issued by Dalda while 52.5 million shares are being offered by DFL Corporation (Pvt) to expand their oil extraction capacity.

AGP Pharmaceuticals plans to offer 35 million shares (12.5%) at a floor of Rs40 per share to increase investor base and improve governance. Hira Textile Mills’ (HIRAT) towel exporting subsidiary Hira Terry Mill plans to float 25 million shares (35% of Post IPO), at a floor price of Rs23 per share to expand and modernise their towel export business.

TPL Corporation’s (TPL) subsidiary TPL Life Insurance plans to float 40 million shares (37% Post IPO) at a floor price of Rs10 per share to grow its existing life and health insurance business as well as maintain its liquidity requirements.

Published in The Express Tribune, December 9^th, 2017.

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