Amreli Steels: Book building ends, results in strike price of Rs51 per share

Company issuing 74.2m shares, 55.5m handed out; public portion remains

KARACHI: The book-building phase of the Initial Public Offer (IPO) of Amreli Steels on Thursday resulted in a strike price of Rs51 per share.

One of the largest makers of reinforcement bars in Pakistan, Amreli Steels is issuing a total of 74.2 million shares in its two-phase IPO. The just-concluded book building phase of the IPO, which consisted of 55.5 million shares, was oversubscribed 2.5 times by institutional and high net worth individual clients.

In the second phase, the rest of the 18.7 million shares will be offered to the general public on October 27-29 at the strike price of Rs51 per share.

This is the second IPO in the steel sector and sixth at Karachi Stock Exchange (KSE) in 2015.

The company received total bids for 138.8 million shares which translated to Rs6.45 billion. At Rs51 per share, the company has raised Rs2.83 billion from book building, Taurus Securities commented on Thursday.

Including the general public offer, the company would raise a total amount of Rs3.79 billion, assuming full subscription at general offer, while the cost of the expansion project is Rs3.4 billion, which will now be completely funded by equity.

The announcement of China-Pakistan Economic Corridor (CPEC) and the overall positive macroeconomic outlook of the economy motivated the company to raise public equity to expand its manufacturing facilities.

With improving security situation, construction and other infrastructure related companies in Pakistan expect better economic activities in coming years.

The company intends to expand rebar production capacity from 180,000 tons per year to 480,000 tons, which will be four times larger than any other steel bar maker in the country.

The company expects that the economies of scale and new technologies will help it cut manufacturing costs, spread fixed costs and as a result improve margins.

Published in The Express Tribune, October 9^th, 2015.

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