Agha Steel Industries to raise Rs5 billion through Sukuk issuance

Will also hold IPO ‘soon’, according to company statement

KARACHI: Agha Steel Industries Limited (ASIL) announced that it will raise Rs5 billion from the debt market through the issuance of an Islamic bond (Sukuk).

According to a statement released on Tuesday, the company stated that it also plans to offer its shares through an initial public offering. However, it did not specify a timeline for the IPO, but said that it would be held soon as part of the company’s ‘strategic vision’.

With the China-Pakistan Economic Corridor (CPEC) generating infrastructure demand, many steel players have announced expansions and raising of funds through capital and debt markets.



“ASIL intends to issue OTC listed, rated and secured Sukuk upto Rs5 billion inclusive of Green Shoe option of (additional) Rs1 billion for six years (including  grace period of 2 years)…in order to fulfill its expansion plans and investing in futuristic technologies,” stated ASIL.

The company has mandated Habib Bank Limited and Bank AL Habib Limited as lead advisors and arrangers for the transaction.

“Specifically identified Musharika (partnership) assets are set to be utilized under a qualified Shariah advisory board. The company intends to receive bids from April 10 to 30, 2018 from qualified institutional buyers,” it said.



ASIL Executive Director Hussain Agha said in the statement that “the company, through this initiative, shall be able to invest in technologies which will make ASIL at least 30% more energy efficient player than the average manufacturers within the domestic industry.

“It is ASIL’s goal that its prospective investors attain the best value proposition in respect to our strategic vision of an Initial Public Offering (IPO) soon,” he added.

The proceeds of the Sukuk will be utilised by the company to fund portion of costs associated with balancing, modernisation and replacement (BMR) activities to existing and new facilities for increase in production capacity and efficiency.

“The company shall also to commission a new rolling mill unit increasing the annual re-rolling capacity of the company from 150,000 tons to 650,000 tons,” said the statement, which did not mention timelines for expansion plans. 

Published in The Express Tribune, April 11^th, 2018.

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