Tech firm delays PSX listing

Postpones IPO due to volatility in international commodity, equity markets

ISLAMABAD:

Coeus Solutions Limited - a tech firm that develops software - has postponed its planned listing at Pakistan Stock Exchange due to prevailing political and economic conditions in the country.

Coeus Solutions’ decision to delay the initial public offering (IPO) highlights the cost that investors may have to pay if the current phase of uncertainty prolongs.

The tech company has postponed the scheduled book building for selling its stake to raise funds, at least two people familiar with the development told The Express Tribune. They said that no new dates had been decided yet.

Coeus Solutions develops and manages software for mostly German clients. The company has planned to use the proceeds to fund acquisitions and expand its products in the remote-working space, according to a news report in November last year.

An official familiar with the development said that the company had not completely shelved the plan for the IPO and it had only been postponed until after Eid.

He said that due to the volatility in international commodity and equity markets, it was not the right time for the IPO.

Brent crude prices went further up to $132 per barrel on Tuesday as the Russian attacks against Ukraine escalated. Commodity prices have also been on the rise.

The political situation in Pakistan has also deteriorated after the Pakistan Democratic Movement (PDM) - an alliance of opposition parties - announced its plan to submit a no-confidence motion.

The opposition on Tuesday submitted the motion against Prime Minister Imran Khan in the National Assembly, which created more political uncertainty. Questions have also been raised over the fate of International Monetary Fund (IMF) loan programme.

Bloomberg had first reported in November last year that the Lahore-based company wanted to raise $5 million by listing on the Pakistan Stock Exchange’s Growth Enterprise Market Board.

The company, which has the second office in Berlin, caters to 30,000 businesses in Germany including Audi AG and Allianz SE, according to Bloomberg.

Less than six months ago, the market was celebrating the success of Octopus Digital, which received a handsome response from investors to the offer of 20% stake to raise financing for the expansion of its business and making its shares available for trade at the PSX.

The tech company broke all previous records during the book-building process at the PSX, as its shares were oversubscribed by a record 27 times and it received bids worth Rs30 billion, according to a report of The Express Tribune.

In recent months, the start-up firms have also made headlines by arranging funds from the private sector for their new ventures.

In the last calendar year, around six companies raised equity at the stock exchange by listing on its main board, which included Octopus Digital, Airlink Communication, Pakistan Aluminium Beverage Cans Limited, Citi Pharma, Services Global Footwear and Panther Tyres.

Another two firms were listed on the Growth Enterprise Market Board.

Tech firms have in recent years gained attraction after the government placed its bets on increase in services and IT exports to $8 billion in the medium term. This year, it is targeting to increase IT exports from $2.1 billion to $3.5 billion.

However, the government has recently hit the information technology sector with new taxes after it imposed 1% services tax on the gross amount of foreign receipts in June last year, indicating inconsistency in policies that diminishes the investment prospects.

Published in The Express Tribune, March 9^th, 2022.

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