Octopus IPO makes history

Octopus Digital has received historical responses from investors during its two-day book building process (auction) to sell 20% shareholding to raise financing for expansion of its business and make its shares available for trade at the Pakistan Stock Exchange (PSX).

“The tech company has broken all the previous records during book building process at PSX, as its shares were oversubscribed by a record 27-time and it received bids worth record Rs30 billion,” Lead Manager and Book Runner BMA Capital Executive Director Saad Hashmey told The Express Tribune.

Institutional and rich individual investors placed bids for 745.61 million shares against a mere 27.35 million (20%) shares put on the sale - showing that shares were oversubscribed by over 27-times, he said.

“The bids for oversubscribed shares amounted to record high at Rs30 billion. No other company so far raised such a high amount during IPO (initial public offering, which is a way of becoming a public company through selling shares to general public) throughout the history at PSX,” he said.

The company, however, sold 27.35 million shares at Rs40.6 per share. Accordingly, it raised a total of Rs1.11 billion in actual during the two-day book building process (auction) on Thursday and Friday.

The IPO is aimed at global expansion of the company, business scale and sustainable growth.  The company would utilise the IPO proceeds for development of intellectual properties (IPs), replicating AMS to Asia, Middle East and Africa.

“The company requires funding…to develop and launch various digital dashboard platforms. The plan is to build twenty nine (29) independent intellectual properties (IPs). The specific dashboards…will be prepared for industrial and manufacturing sectors, which will provide at-a-glance view of key performance indicators relevant to a particular objective or business process,” the company said in its prospectus for the IPO.

Octopus Digital uses big data, artificial intelligence (AI) and machine learning to provide solutions designed for collaborative real-time analysis to improve process efficiencies and help its customers transition into the industry 4.0 era (the next level of tech efficiency).

The company opened bidding at the minimum share price of Rs29 each and achieved final bid price of Rs40.6 per share, which was the maximum allowed price for the IPO. “Per laws in place the share price could go as high as by 40% to Rs40.6 per share from bid opening price of Rs29,” Hashmey said.

The company sold 20.51 million shares (75% of the total 27.35 million shares) to institutional and high net worth individual investors. It is scheduled to offer rest of the 25% (or 6.84 million shares) to retail investors on September 16-17.

“The oversubscription suggests there is strong appetite…and huge liquidity available for investment in tech firms at the national bourse,” the BMA official said.

“This is the first initial public offering (IPO) by a tech company (Octopus) after a gap of seven years at PSX,” Lead Manager and Book Runner BMA Capital told.

Systems Limited was the last tech firm listed at the Pakistan bourse. Octopus Digital is a subsidiary of Avanceon Limited which was listed at the PSX (formerly Karachi Stock Exchange) in late 2013.

Published in The Express Tribune, September 11^th, 2021.

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