Amreli Steels looks to raise Rs1.78b through IPO

Promising outlook of construction sector motivates move

Our Correspondent September 28, 2015

KARACHI: Amreli Steels is looking to raise at least Rs1.78 billion in its upcoming Initial Public Offer (IPO), according to the company’s official filings.

The steel-bar manufacturer will issue a total of 74.2 million shares, with a face value of Rs10 each, at a floor price of Rs24 per share.

In the first phase of the IPO to be held on October 7-8, Amreli Steels will sell 55.5 million shares to institutional and high net-worth individual clients. The second phase of the IPO, consisting of the sale of 18.7 million shares to the general public, will take place on October 27-29.

The recent promising outlook of the country’s construction sector, along with the announcement of China-Pakistan Economic Corridor (CPEC), has motivated the company to raise public equity to expand its manufacturing facilities.

With improving security outlook of the country, construction and other infrastructure related companies in Pakistan are expecting better economic activities in coming years, and Amreeli Steels is no different.

Amreli Steels is expanding rebar, or reinforcing bars used as rods to support concrete structures, capacity from 180,000 to 480,000 tons per year, which will be four times larger than any other steel rebar maker in the country.

Furthermore, it expects the economies of scale and new technologies to help it cut manufacturing costs, spread fixed costs and as a result improve margins.

This will be the first IPO after new book building regulations issued by SECP earlier this fiscal year. The new book building regulations are aimed to curb speculative or manipulative attempts during the auction through various measures.

Amreli Steels’ IPO follows that of Mughal Iron and Steel Industries that also raised equity and was listed earlier this year.

Published in The Express Tribune, September 29th, 2015.

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