PSX witnesses three IPOs of Rs8.6 billion in 2017

KARACHI: At least three companies raised Rs8.6 billion by offering their shares to public during the outgoing year to capitalise on the bull run driven by MSCI upgrade, a brokerage report said on Friday.

The equity market also witnessed three initial public offerings (IPOs) in 2016, but they raised Rs4.2 billion.

In 2017, Pakistan Stock Exchange (PSX) raised Rs4.49 billion in primary offerings through floating 160.3 million shares at a floor price of 28/share. Its strike price remained the same.

The issue was 20 percent of the PSX’s stake. Earlier, its 40 percent strategic stake was sold to a consortium of Chinese investors. On the first day of trade, it dropped five percent, while it has so far shed 33 percent to trade at Rs18.8 per share.

The second largest IPO was of Roshan Packages Limited, a packaging company, with Rs2.8 billion against 32.5 million shares for 35/share. The issue was oversubscribed 6.8 times and struck at a whopping Rs86.25/share, 2.5 times higher than the floor.

Steel maker Ittefaq Iron Industries raised Rs1.26 billion with 41.75 million shares at floor price of Rs12/share. The issue was oversubscribed by 2.5 times, while the striking price rose 2.5 times to Rs30.2/share.

Analyst Adnan Sami at Topline Securities said five more IPOs are expected during the next year.

Towel maker Hira Terry Mill plans to float 25 million shares at a floor price of Rs23/share.

TPL Life Insurance wants to float 40 million shares at a floor price of Rs10/share.

Ethanol producer Unicol Limited plans to issue 37.5 million shares at a floor of Rs24/share.

Rice processor Matco Foods aims to issue 29.1 shares at Rs26/share and electricity producer Liberty Power Tech eyes an IPO for 126.1 million shares for Rs40/share.

“The year 2017 turned out to be a tale of two halves for the KSE 100-share Index,” Sami said.

He said the first half saw a bull run fueled by MSCI-EM (Morgan Stanley Capital International) inclusion euphoria as the market rallied up on May 24 with a year-to-date (YTD) gain of 11 percent. “Subsequently… the index shed a whopping 25 percent from its peak and took YTD return down to 17 percent.”

The market posted a significant decline in 2017 after strong gains in the past five years with compound annual growth rate of 33 percent (29 percent in dollar terms) and KSE 100-share index soared to 48,000 points from the 11,000-point mark.

Topline analyst said at least three IPOs were delayed during the year due to some regulatory setbacks.

For example, Inbox Business Technologies, software house of Dawood Group, planned to issue 45.4 million shares at Rs30 per share. Dalda Foods wanted to float 82.5 million shares at Rs85 per share, while AGP Pharmaceuticals aimed to offer 35 million shares for Rs40 per share.