Only five initial public offerings this year

All IPO prices have dipped since launch.

KARACHI: The year will conclude with only five equity offerings at the Karachi Stock Exchange which are far lower from last five-year average of eight initial public offerings (IPOs).

Interestingly, all IPOs worth Rs3.5 billion are currently trading at a lower price than their initial price offered while the stock market posted a handsome return of 23 per cent this year to date, according to Topline Securities.

Two fertiliser companies preferred to tap local markets including Fatima Fertiliser and Agritech while others were Safe Mix from the construction sector, Amtex from textile and Wateen Telecom. Agritech was the only one undersubscribed whereas all others got a good response.

However, five IPOs are still an improvement from 2009 when the local bourse because of the adverse economic condition and severe liquidity crunch saw only three IPOs worth Rs1.2 billion, said Topline Securities analyst Furqan Punjani.

All five IPOs were initiated in the first four months of 2010 and there has been no offering since April, informed Punjani.

Global IPOs: a different picture

With Pakistan posting a depressing trend, the global bourses broke all past records in IPOs with increased investor craving for better returns amid lower interest rates in developed markets and better earnings growth from emerging and frontier markets.

China, boosted by investor demand for its high-growth companies, dominated the offerings, contributing almost half the total equity raised globally. This year till November total offerings worth $255 billion were seen in Asia which might exceed $295 billion witnessed in 2007, according to Ernst & Young.

Along with massive inflows to emerging economies, Europe saw more than a 500 per cent increase in the amount of IPO funds raised against the same period in 2009, according to Ernst & Young. This came despite the economic crisis worsening in Ireland and others.

Published in The Express Tribune, December 11^th, 2010.