Packaging films firm plans Rs1.47b IPO

Will offer 70.1m shares at minimum price of Rs21 in early May

KARACHI:

International Packaging Films (IPAK) has planned to raise a minimum of Rs1.47 billion through putting on sale its 70.1 million shares at a price starting from Rs21 per share at the Pakistan Stock Exchange (PSX) early next month.

PSX’s book building rules allow a maximum 40% increase in the share price to Rs29.40 during bidding from the floor (beginning) price at the two-day initial public offering (IPO) scheduled for the second week of May 2024. The offer of 70.1 million shares is equivalent to 10.1% of the post-IPO paid-up capital of the company.

In a statement, the company announced that it would utilise the proceeds raised from the IPO for early repayment of long-term loans acquired to fund expansion projects, ie, setting up manufacturing facilities for BOPP and BOPET films. The group claims it is the largest flexible films manufacturer and collectively offers a diverse portfolio of packaging solutions, producing BOPP, CPP and BOPET films. It is the first-ever group in Pakistan to provide one-window flexible packaging solutions and is working at three strategically important locations in the country.

IPAK, along with its subsidiaries – Cast Packaging Films, Petpak Films and Global Packaging Films, collectively forms the largest manufacturing group of flexible packaging films in Pakistan, with total nameplate capacity of over 150,000 tons per annum, spread over an area of 50 acres. The stock issue (IPO) is being made through a 100% book building process whereby bidders will place bids for 100% of the issue. However, the successful bidders shall be allocated only 75% of shares and the remaining 25% shall be offered to retail investors.

In case, the retail portion remains unsubscribed, the unsubscribed shares will be allotted to the successful bidders on a pro rata basis. International Packaging Films recorded net sales of Rs19.9 billion in financial year 2023 while its gross margins were 27% and profit before tax stood at Rs2.9 billion.

Net profit of the company was Rs1.6 billion for the year. Its three-year revenue (compound annual growth rate – CAGR) remained at 41%. Apart from catering to the local demand and substituting the imported products, the company also exports its products to North America, Europe, Africa, the Far East and Middle Eastern countries such as Saudi Arabia and Oman, earning foreign exchange for the country.

The statement quoted IPAK Group CEO Naveed Godil as saying that his company was expected to earn $15-20 million through exports in financial year 2024-25.

Arif Habib Ltd (AHL) Chief Executive Shahid Ali Habib said investors had an exciting opportunity to invest in International Packaging Films, Pakistan’s largest manufacturer of flexible packaging films, with three-year revenue (CAGR) of 41% and enticing forward P/E (price-to-earnings) and P/B (price-to-book) multiples of 4.2 times and 0.8 time, respectively.

AHL and AKD Securities have been mandated by IPAK to act as lead manager and joint lead manager, respectively, for raising funds through the IPO.

Established in 2015, the firm initiated work as a green field project to manufacture Biaxially Oriented Polypropylene (BOPP) films through a production line acquired from Bruckner Maschinenbau (Germany).

Published in The Express Tribune, April 28^th, 2024.

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