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February 24, 2017

Daewoo plans Rs4 billion IPO in June

Business

February 24, 2017

KARACHI: Daewoo Express, the Pakistan’s only foreign transport service provider, has planned to secure four billion rupees through an initial public offering (IPO) at the country’s capital market, sources said on Thursday – a move to further expand the company’s network nationwide.

The sources said the IPO is set to be conducted in June.  

“In order to capitalise on opportunities arising in the wake of CPEC (China Pakistan Economic Corridor) and growing middle class, Daewoo Express has decided to go public,” a source, privy to the development, told The News.  The source said Arif Habib Limited will be managing the forthcoming IPO.

With a fleet comprising of more than 350 buses, Korean Daewoo Express operates from 58 terminals and sub-terminals in Sindh, Punjab and Khyber Pakhtunkhwa, touching more than 60 cities and plying on all major highways and motorways of Pakistan. Annually, more than 6.6 million people travel on its buses.

Moreover, Daewoo also manages the third largest parcel delivery and cargo transportation facility after TCS and Leopards Courier.

Industry officials said the CPEC, envisaging a network of highways and bridges, would reduce road transportation time between Karachi to Islamabad to 14 hours from the existing 22 hours.

“Middle class is booming in the country and they will increasingly choose more organised transports,” an official said. “Removing the safety concerns will also expand the potential traveler base to include children and women travelling alone.”

At present, around 10,000 intercity buses pass through Karachi and 4,000 visit Lahore every month.

“This number would substantially increase with the passage of time,” the official said. “We feel this is the right time for a company to go public.”

The officials said Pakistan’s transportation sector largely remains untapped. As economy improves and disposable income increases travelling is bound to increase and Daewoo should be able to capitalise on it.

Developing highways and road networks are the trigger for the company, which already started operating Multan Metro Service, which includes 35 buses to provide transportation to an estimated 95,000 commuters daily in the first phase and greater inter-city commute.

In September last, Swedish asset manager Tundra Fonder bought a 9.4 percent stake in Daewoo Express.

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