Air Link to raise Rs5.85b through IPO

Plans to increase its import and distribution capacity, open more outlets across country

Air Link Communication - an importer and distributor of mobile phones in Pakistan - has applied for listing at the Pakistan Stock Exchange (PSX), aiming to raise a minimum Rs5.85 billion against 90 million shares to increase its import and distribution capacity and open more outlets nationwide.

The company has planned to offer 90 million shares to corporate, high net-worth individual and retail investors through book building (Dutch auction process).

Lead manager and consultant for the issuance of shares, JS Global, has suggested the minimum share price of Rs65, meaning investors cannot offer a buying price below this rate in the auction “with a maximum price band of up to 40%,” according to the company’s prospectus available on the PSX website.

“There is a huge demand for smartphones in Pakistan owing to the growing population. The conversion rate from feature phones to smartphones is quite high whereas the introduction of ride-hailing services like Careem and Uber has further boosted the demand for smartphones in the country,” stated the prospectus.

“Device Identification, Registration and Blocking System (DIRBS) by Pakistan Telecommunication Authority (PTA) has significantly enhanced the demand for documented imported phones by blocking all grey market (smuggled) phones, which are estimated to be around 30-35% of the overall mobile phone market. The growing e-commerce industry will further enhance the demand for smartphones.”

According to Pakistan Customs and a GfK report, the company owns “a market share of around 20% within imported mobile phones.”

“IPO (initial public offering) proceeds would be utilised for injection of working capital to expand the company’s distribution and retail network,” said the prospectus.

“The issue is expected to generate Rs5.85 billion at a floor (minimum) price worth Rs65 per share, out of which Rs3.90 billion (new issue of 60 million shares) shall be utilised to finance working capital requirements,” it said.

“The issuer’s total working capital requirement is Rs5.439 billion, out of which Rs3.90 billion (72% of the total working capital requirement) shall be financed by proceeds from the new issue and the remaining Rs1.539 billion (28% of the total working capital requirement) shall be financed from ST (short-term) financing facilities.”

During the first quarter (July-September) of current fiscal year, the company sold mobile phones and accessories worth Rs15.52 billion and earned a net profit of Rs533.09 million.

Published in The Express Tribune, December 3^rd, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.