PABC eyes Rs3.3 billion in public debut on PSX

KARACHI: Pakistan Aluminium Beverage Cans (PABC) is planning to raise Rs3.3 billion through an initial public offering (IPO) on the Pakistan Stock Exchange by the end of this month, the company said.

PABC, a joint venture of the U.K.’s Ashmore Group and Pakistan’s Liberty Group Ltd, will offer a 26 percent stake to institutional and retail investors. Book building will take place on June 22 and 23, followed by public subscription on June 29 and 30.

“The entire offer of 93.8 million ordinary shares, or 26 per cent of the post-IPO shareholding, will be offered through the book-building process at a floor price of Rs35 per share. Successful bidders will be provisionally allotted only 75 per cent of the issue size and the remaining shares will be offered to the retail investors at the strike price,” PABC said in a statement.

“Based on the interest from investors during the book building process, the strike price can rise by 40 percent (Rs49 a share), thus helping the company collect Rs4.6 billion.”

PABC supplies to the bottlers of all major carbonated drinks, including PepsiCo and Coca-Cola, in both Pakistan and Afghanistan. Exports to Afghanistan constituted 35 percent of the company’s sales last year.

Established on a 20.9-acre piece of land in Faisalabad's special economic zone with a current rated capacity of 700 million cans per annum, PABC continues to enjoy a 10-year tax holiday. The company is increasing its rated capacity by almost 36 percent to 950 million cans per annum by July next year.

The company has grown its revenue at an annualised rate of 18.7 percent in the last five years.

In the third full year of its operation (2020), the company's net profit amounted to Rs610.7 million, up 314 per cent from 2019. It expects its bottom line to grow at 140 per cent in 2021.

Ashmore Mauritius PABC Ltd, a specialist emerging markets investment manager based in Mauritius, currently holds 51 percent shareholding in the company while Liberty Group, a leading player in textile and power sectors, owns the remaining 49 per cent stake. With the exit of Ashmore post-IPO, Liberty Group, general public and Soorty Enterprises will own 54 per cent, 26 percent and 20 percent shareholding in the company.

Euromonitor International puts the size of Pakistan's soft drinks market at 3.8 billion litres per annum. It expects the market to grow at a five-year annualised rate of seven per cent to reach 5.3 billion litres in 2025 on the back of rising purchasing power, urbanisation and favorable demographics.

With the estimated market size of 275 million cans, aluminium beverage cans in Pakistan account for only 3.6 percent of total soft drinks sales as opposed to the global average of 19 percent.

PBAC recently signed agreements and initiated exports to leading beverage players in the United States. North America accounts for more than one-third of the global consumption of aluminum cans mainly because of the environmental concerns. The company is also in discussion with key beverage bottlers in Bangladesh and Iraq.