The Organic Meat Company Limited has successfully raised interest-free financing of Rs800 million through the offer of 40 million shares to local and foreign institutional investors and high net-worth individuals at the Pakistan Stock Exchange (PSX).
The Pakistan-based exporter of halal meat sold 40 million, or 35.77%, of the firm’s shares at Rs20 each. The sale price was higher by Rs2 than the bid opening price of Rs18 per share. “The funds being raised through the IPO (initial public offering) would help us raise the value and profile of the company and enable future growth,” The Organic Meat Company Chief Executive and Sponsor Faisal Hussain said in a pre-IPO press statement.
“It’s been a long journey, starting from a very small facility to getting listed (at the PSX). We will make every effort to live up to the expectations of investors and also continue the growth momentum,” he said.
In the first phase of the IPO - the book-building process - the company received bids for 100% (40 million) shares from institutional and high net-worth individual investors.
Successful bidders were, however, provisionally allotted 75% of the 40 million shares and 25% of the issue size would be offered to retail investors at Rs20 per share from July 14 to 16. In case of low subscription by the retail investors, the unsubscribed shares will be allotted to the remaining successful institutional and high net worth bidders on a pro rata basis.
“Investors’ response was far better than expected despite the coronavirus-led economic contraction. The shares were oversubscribed by 1.7 times,” the statement said. It was the first IPO after a gap of 15 months at the PSX.
“There is always demand for quality businesses run by the experienced management. Despite economic contraction and lockdown, we saw good participation by local and foreign investors, which bodes well for the future IPOs at the PSX,” IPO Consultant Topline Securities CEO Mohammed Sohail said in comments. The firm posted a profit of Rs217 million in fiscal year 2018-19. It generated sales revenue of Rs2.57 billion during the year. The company reported earnings per share (EPS) of Rs3.04 in the IPO prospectus.
The IPO took place under the amended regulations of the Securities and Exchange Commission of Pakistan (SECP). “Amendments were made in the Public Offering Regulations 2017 by the SECP whereby the eligibility criteria for the listing of companies were simplified, and the IPO process was made easier and cost-effective to attract new listings,” the statement said.
PSX MD Farrukh H Khan said, “It is a happy and proud moment as the premier and only stock exchange of the country has listed the first company in fiscal year 2020-21.”
Published in The Express Tribune, July 8th, 2020.