Corporate sector cautious in securing funds

KARACHI: Both public and private sector companies seemed reluctant to secure funds from the equity market in 2016 as only three public offerings came into limelight during the outgoing year as compared to six in 2015, a brokerage reported on Thursday.  

Topline Securities, in a report, said the Pakistan Stock Exchange witnessed only three initial public offerings (IPOs) in 2016 and the private companies together secured only Rs4.2 billion.

In 2015, there were six public offerings of Rs116 billion, including Habib Bank Limited’s secondary offering of Rs102.3 billion, it added.

The country had witnessed the country’s biggest divestment deal in 2015 during the past one decade after the government put its residual 41.5 percent stake in HBL on sale to public. It raised $1.06 billion through the equity offering. In 2006, the government secured $712 million from selling its stake in the Oil and Gas Development Company Limited.

Topline Securities said the IPOs in 2016 comprised of Hi-Tech Lubricants, raising Rs1.8 billion, Loads Limited (Rs1.7 billion) and TPL Properties (Rs0.7 billion). 

The brokerage report said around five to seven public offerings in foods/dairy, banking, information technology, media and pharmaceuticals are expected in 2017. There would, however, be no big offerings from the government except State Life. 

Two of the public offerings in 2016 were related to sectors that significantly outperformed market.

Loads Limited is a local auto parts manufacturer. Auto sector posted gains of 68 percent year-to-date, highest in 2016.  Similarly, Hi-Tech Lubricants is part of local oil marketing sector, which was up phenomenal 60 percent. Both sectors outperformed market gains of 43 percent.