Pakistan Strategy – 2024: Good year for IPO’s; Companies raised Rs8.4bn for 7 IPOs, highest amount in last 3-Years
ISLAMABAD: Pakistan market (PSX) saw an increase in offerings in 2024, with the bourse witnessing 7 IPOs (including 2 GEM Board offerings), compared to just 1 IPO in the previous year.
The total amount raised from investors through the 7 offerings in 2024 stood at Rs8.4bn, marking the highest level since 2021, when there were 8 offerings that raised a total of Rs19.9bn.
The market saw immense enthusiasm in these offerings during the year as all of them were oversubscribed.BF Biosciences Limited: IPO Offering 25mn shares at Rs55/share floor price
We attribute this as a good year for IPOs, driven by macroeconomic stability under the IMF program, coupled with positive market sentiment, high liquidity, falling interest rates and political stability, which encouraged equity investment.
The benchmark KSE-100 Index surged significantly by 83% in PKR terms and 85% in US$ terms in 2024 to date, reflecting overall positive sentiment and renewed investor interest.
The average daily traded volume has also increased by 69%, reaching 545mn shares, while the daily traded value has risen by 108% to Rs21bn during 2024TD.
In 2024, new listings on the Main Board included Secure Logistics (SLGL), TPL REIT Fund-I (TPLRF1), International Packaging (IPAK), Fast Cables (FCL), and BF Biosciences (BFBIO). Meanwhile, Mughal Energy (GEMMEL) and Burj Clean Energy (GEMBCEM) were added to the GEM Board.
Pakistan market outperformed the global trend, which saw a slowdown in IPO activity. As per Ernst & Young (E&Y), a total of 870 IPOs were witnessed till 9M2024 raising US$78bn compared to 983 IPOs raising US$101bn in same period last year. This decline reflects the global slowdown in new IPOs, attributed to the transition where factors such as economic deceleration, US presidential elections, geopolitical frictions and regulatory shifts casted a shadow of uncertainty over the investment realm, posing potential challenges to the IPO market.
Outlook for 2025: We believe, more IPOs coming to market in 2025 as market valuations have sizably increased. Furthermore, abundant availability of liquidity amidst conversion from fixed income will also encourage companies to offer shares in market.
5 offerings at main board, all oversubscribed
In mainboard, 5 companies raised funds. These companies represented various sectors including Transport, Real Estate Investment, Paper Board & Packaging, Cable & Electrical Goods, and Pharmaceuticals.
Secure Logistics Group Limited (SLGL): The company involved in two main business segments i.e Logistics & Tracking and Fleet Management Services. The primary purpose of the IPO was to deleverage the balance sheet amid an unprecedented high-interest-rate environment, enhance the company’s infrastructure and technology base to support the Tech-Pivot initiative, facilitate expansion into the regional market, and optimize fleet-related efficiencies. The company offered 50mn shares at strike price of Rs12/share, raising Rs600mn in August, 2024 with an oversubscription of 1.02x.
TPL REIT Fund I (TPLRF1): The REIT Scheme is part of TPL Group which is Pakistan’s prominent technology conglomerate with businesses across a variety of sectors. The principal activity of the fund is investing in real estate projects through Special Purpose Vehicles (SPVs) in accordance with the constitutive documents and applicable laws to generate income/returns for investors through rental income and capital appreciation. The purpose of offer for sales are (1) Compliance with REIT Regulations, (2) Unblocking of Units, (3) Interest of Foreign Investors, and (4) Price discovery. The company offered 19.4mn shares at fixed price of Rs17.6/share, raising Rs589mn in May, 2024 with an oversubscription of 1.46x.
International Packaging Films Limited (IPAK): The company is principally engaged in the manufacturing and sale of flexible packaging materials mainly comprising of BOPP (Biaxially-oriented Polypropylene) films and allied products. IPAK seeks listing with the sole purpose of raising funds to repay long-term debt, which the company obtained to finance its expansion project. Expansion project was aimed at increasing the capacity of BOPP films from 41K tons to 100k tons and introduce Biaxially Oriented Polyethylene Terephthalate (BOPET) films with capacity of 42k tons. The total cost of expansion was around Rs22bn. The company offered 70.1mn shares at strike price of Rs25.2/share, raising Rs1,767mn in Jun, 2024 with an oversubscription of 1.73x.
Fast Cables Limited (FCL): Fast Cables is a preeminent local manufacturer of top-quality electrical cables and conductors in Pakistan. The company raised funds to be utilized for: (1) the acquisition of new land, (2) the construction of a state-of-the-art building, (3) the installation of new plant and machinery, (4) the repayment of debt associated with the machinery, and (5) the development of building components. The company offered 128mn shares at strike price of Rs24.5/share, raising Rs3,130mn in Jun, 2024 with an oversubscription of 1.57x.
BF Biosciences Limited (BFBIO): BF Biosciences Limited is a joint venture between Ferozsons Laboratories Limited and Argentina’s Bagó Group, incorporated in 2006. The company raised funds to be utilized in: (1) purchasing raw and packing materials to meet post-expansion working capital needs, (2) purchasing plant and machinery to broaden the product base and improve process efficiencies, and (3) acquiring export certifications such as PIC/S and SRA, as well as supporting new product development, including Glucagon-like Peptide (GLP-1). The company offered 25mn shares at strike price of Rs77/share, raising Rs1,925mn in August, 2024 with an oversubscription of 3.4x.
