Go public: LSE MD highlights need for further IPOs

Awareness would help country’s stock markets perform better.

LAHORE:

There is an urgent, and justified, need to get businesses to go public as their performance warrants their inclusion on the stock exchange, said Lahore Stock Exchange (LSE) Managing Director Aftab Ahmad as he addressed the Lahore Economic Journalists Association.

Ahmad said stakeholders needed to be informed of the benefits of going public, which would encourage them of making the move, adding that there was enough capital that could be invested in the bourse.

“Though the official size of the Pakistan’s economy is $250 billion, the share of the informal sector is much larger, indicating that people have enough capital to invest,” said Ahmad. “If we add the informal or the undocumented sector, then the figure will easily touch the $600-billion mark.”

He said that awareness needed to be created over the performance and function of the stock exchange. Ahmad added that institutional reforms and Initial public offerings (IPOs) would go a long way in helping the stock exchange as well.

In 2014, the management at LSE was able to convince three private companies to be listed that included Systems Limited, an Information Technology company working under the cover of Packages limited, SPEL Limited, an automotive parts manufacturer, and Mughal Steel.

According to Ahmad, investors took a keen interest in these IPOs. “The response for Systems Limited was 300% more than the expectations.”

Ahmad said Punjab, especially Lahore, has the potential as major infrastructural development including energy projects were scheduled in the province.

“Pak-India trade is another opportunity, as in this case the city will become a gateway and lots of companies will relocate inside or around the city,” said Ahmad.

Ahmad acknowledged the fact that for the last 67 years, the number of investors in capital market has been hovering around 250,000. The reason for this low figure is the lack of confidence among people in capital markets and the fear of default.

Despite reaching record highs, Ahmad said that the country’s stock markets still have a lot to offer.

“Around 30-40% of the free float is held by foreign investors, therefore, the market is likely to remain stable and see more growth,” he added.

Published in The Express Tribune, January 21^st, 2015.

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