PSX prepares for first IPO of 2024
The Pakistan Stock Exchange (PSX) is poised to welcome the first new company to its trading platform in the New Year 2024 after emerging as the world’s best-performing stock market in the second half (Jul-Dec) of 2023.
Speaking to The Express Tribune, Shahid Ali Habib, Chief Executive Officer of Arif Habib Limited (AHL), stated that Secure Logistics Group (SLG) in Pakistan is preparing for an initial public offering (IPO) in the first quarter of 2024. The company aims to sell 63 million shares to institutional investors, high-net-worth individuals, and retail investors, with the goal of raising a minimum financing of Rs750 million on the PSX.
The funds raised from the IPO will be utilised for debt repayment, the addition of 25 distribution vehicles, upgrading IT infrastructure, and establishing a warehouse in the vicinity of Lahore, said Habib.
AHL is the exclusive financial adviser and book-runner for the IPO.
The last IPO at PSX took place about five months ago when Symmetry Group went public in early August 2023. It was the sole IPO held in the entire preceding year, marked by heightened political and economic crises.
SLG, headquartered in Islamabad, specialises in providing logistics and vehicle fleet management services in Pakistan. Following the IPO, SLG will become the first logistics-listed company in the country, he said.
Currently managing a fleet of 283 vehicles, SLG’s revenue is projected to increase to Rs2.1 billion in 2023, with an anticipated 28% growth in 2024, said the AHL CEO.
Earlier plans for an IPO in 2022, with a target of raising Rs1.5 billion, were temporarily shelved due to political and economic uncertainties that could impact the accurate pricing of stocks through a Dutch auction.
SLG has re-entered the market for the IPO following PSX’s impressive 55% growth in 2023, particularly in the second half, ending the year at a new high level of 62,451 points on December 29.
Read PSX gets off to flying start in 2024
Additionally, signs of economic recovery have been observed since July 2023, according to the State Bank of Pakistan. Research analysts project the market to reach new highs, ranging between 75,000 and 81,000 points by the end of December 2024, considering that share prices still remain lower than historical levels.
Factors such as the general election in February 2024, a potential acquisition of another IMF bailout package after the completion of the current one in March 2024, and an expected 4-5% cut in the central bank’s key policy rate to 17-18% by the end of June 2024 are predicted to support a turnaround in the domestic economy and maintain an uptrend in the stock market.
Topline Research recently reported that PSX saw only one IPO in 2023, raising a meagre Rs435 million. This amount is the lowest raised in a year in the past decade and a half, compared to the previous record low of Rs800 million in 2013.
The number of IPOs at PSX has remained at a single IPO per year since 2019, a stark contrast to the previous 5-year and 10-year averages of four IPOs per year. Analysts attribute this trend to macro-economic instability, the looming threat of default, cheap valuations, and political uncertainty, all of which discourage equity investment.
The lone IPO in 2023 was that of Symmetry Group on the main board. As Pakistan’s first publicly listed digital technology company, Symmetry Group focuses on the digitalisation of consumer-centric functions of organizations. The company offered 101.24 million shares at a strike price of Rs4.3/share, raising Rs435 million in August 2023, with an oversubscription of 1.58 times.
Published in The Express Tribune, January 6th, 2024.
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