An IT and telecommunication company has successfully raised equity financing worth Rs475 million by auctioning 18.81% stake to institutional and rich individual investors at thePakistan Stock Exchange (PSX).
Supernet Limited sold a total of 21.11 million shares at a strike price of Rs22.5 per share which was determined during the Dutch auction (booking building) that concluded on Wednesday.
This was the third company in a row to get listed at the Growth Enterprise Market (GEM) board in the past five months. The GEM board was separately designed to welcome growth companies like small and medium-sized enterprises (SMEs), greenfield projects and tech startups at PSX.
The issue of share was oversubscribed by 1.4 times during the two-day (April 12-13) book building process to Rs659 million, the book runner to the issue Topline Securities reported on its official Twitter handle on Wednesday.
The bidding kick-started the auction at a minimum (floor) price of Rs22.5 per share. Majority of the participants bid for the shares at the floor price. Therefore, it was determined as the strike price as well.
As per rules, the share price could rise by a maximum of 40% (or Rs9) to cap at Rs31.5 per share.
Out of the total raised equity of Rs475 million, the company would utilise 10.89% (Rs275 million) for expansion of existing and new projects, while the remaining 7.92% (Rs200 million) would go to sponsor (owner) shareholders who opted to sell their shareholding to new investors, according to the company’s information memorandum (IM).
The company estimated its total financial requirement for expansion and new projects at Rs857 million. “Out of the total requirement of Rs857 million, a total of Rs275 million…raised through this initial offer (10.89%) and the remaining Rs582 million will be financed through internally generated funds and debt if required.”
“The company confirms that it is reasonably certain that it will be able to finance its working capital and capital expenditures from internal cash flows.”
The company plans to spend Rs296 million on fixed assets in FY22. The company would utilise Rs125 million from fresh equity issuance proceeds and the remaining capital expenditure would be financed through company’s own sources.
Supernet provides tailor made services to its corporate clients which include security, connectivity and consultancy.
To enable SNL to render these services, Supernet incurs capital expenditure (investment) that significantly varies according to the customers’ requirements.
The company has set up subsidiaries to engage in specific lines of business. In order to support the business plans of these subsidiaries, “the company plans to inject fresh investment primarily to support working capital requirements of the businesses,” according to IM
The company has calculated that over a period of three years, Rs436 million would be required for working capital to finance the extra ordinary growth. It would utilise Rs100 million from fresh equity issuance proceeds to working capital requirements and the remaining amount would be financed through internal cash flows, it said.
Topline Securities CEO Mohammad Sohail said in a press statement that there was a lot of demand for tech related stocks and that is why “we saw higher than anticipated bids in the book building of Supernet.”
Acknowledging the interest and trust showed by institutional and individual investors on the company, Supernet CEO Jamal Nasir “hopes that their investment in the company would yield great returns. We have offered great value to our investors and their trust and investment would grow with Supernet.”
Supernet Group is aggressively expanding into cyber security, power solution and IT and infrastructure solutions business. “The proceeds from listing will be utilised to finance the expansion plan,” he said in the statement.
SNL has set up two new subsidiaries including Supernet Secure Solutions Private Limited and Supernet Infrastructure Solutions Private Limited.
Another subsidiary, Phoenix Global (Supernet Global Solutions), is a UAE based company that offers a wide range of IT & Communication solutions to its international clients.
Published in The Express Tribune, April 14th, 2022.
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