PSX to witness tech company’s IPO after five years

KARACHI: Pakistan Stock Exchange (PSX) is expected to witness an initial public offering (IPO) from a tech company after a gap of five years with BMA capital to be the lead manager, an analyst said on Tuesday.

Octopus Digital Limited, a subsidiary of Avanceon Limited, planned to go public in the beginning of next year and pull in Rs1.5 billion, according to the analyst.

The analyst said the stock market saw the last IPO from a tech company Systems Limited and since then there has been a lull.

Its IPO fetched at least $5.2 million from 8,000 to 8,500 new shareholders. The offers were oversubscribed, demonstrating the growing trust of investors on software business. Systems Limited was the fourth listed scrip in the software and computer services category of the Karachi Stock Exchange after Netsol, TRG and Avanceon Limited.

Avanceon Limited mandated BMA Capital to lead the planned IPO.

“Octopus Digital Limited aims to tap into a large investor base to raise capital and provide the Pakistan’s capital market an opportunity to invest in smart industries,” a statement said.

“Octopus Digital Limited is the result of three decades of experience and expertise within the Industrial automation space. The newly formed entity helps businesses digitalise manufacturing, supply chain and financial workflows backed by strategic and operational maintenance support services.”

Octopus Digital will have the distinction of being the first Industry 4.0 entity to go public in Pakistan.

Last year, the Securities and Exchange Commission of Pakistan proposed legal amendments to encourage companies to raise capital from the primary equity market that saw an average three initial public offerings a year in the last three years.

The drought in primary equity market has been extending for the last couple of years. Exactly three companies went to the market to issue public offerings in 2018, 2017 and 2016.

The numbers remained low compared to the scheduled issuance at the start of each year.

The ministry of information technology and telecommunication announced an incentive package for the promotion of IT sector, aiming at increasing exports from the current level of around $1 billion to $10 billion by 2023.

This package was prepared after an analysis of other important IT destinations of the region like Philippines, China, Bangladesh and India. Special technology zones are to be set up under the policy to promote IT/ITeS exports for which an allocation of Rs6.5 billion in the forthcoming budget has been proposed by the ministry to the Planning Commission.