PSX’s public offering receives dismal response

KARACHI: Pakistan Stock Exchange’s (PSX) management was urged to extend the time period for the public offering of its 20 percent stake as the book building process didn’t get a warm response on the first day on Tuesday.

“Several bids could not be submitted because of limited banking hours (in Ramazan),” said Shahid Habib, chief executive officer at Arif Habib Limited. “We have approached the bourse management to extend book building till June 8… we are confident that there would be no under-subscription.”

The PSX’s 20 percent shares are being offered to high net-worth individuals, institutional investors and the retail investors at a floor price of Rs28/share. The quantum of public offering is 160 million shares. The two-day process began on Tuesday.  

Habib said the bids for 20 million shares were received on the first day of the book building. The entire public issue is being offered via book building process. However, the 25 percent of the offer size (40.074 million shares) will be offered to retail Investors at the strike price determined through the book building mechanism. Unsubscribed shares by public will be allocated at pro-rata to successful investors as per the book building process.

Sources said the bids, received on the first day, did not suggest that there would be any appreciation in the value of shares compared with the floor price of Rs28/share.  Officials, however, expressed confidence that the strike price would be somewhere between Rs30//share and Rs31/share.  

PSX’s spokespersons said the divestment of PSX shares was a historic event.  “It provides great opportunity to investors to acquire shares of the country’s only stock exchange,” a spokesperson said. 

Traditionally, stock exchanges were mostly owned by brokers, but recently, 40 percent equity stake (320 million shares) together with the bourse’s management control was divested to a consortium, comprising of three Chinese exchanges and two local financial institutions against Rs8.96 billion ($85 million).  

The public offering of the PSX’s shares is the second in South Asia after Bombay Stock Exchange offered shares to public four months back, which was highly oversubscribed.