- PSX recorded 7 IPOs raising PKR8.4 billion, oversubscribed offerings driven by macroeconomic stability and liquidity
Pakistan Stock Exchange (PSX) recorded an increase in offerings in 2024, with the bourse witnessing 7 IPOs (including 2 GEM Board offerings), compared to just one IPO in the previous year.
The total amount raised from investors through the 7 offerings in 2024 amounted PKR8.4 billion, marking the highest level since 2021, when there were 8 offerings that raised a total of PKR19.9 billion.
The market saw immense enthusiasm in these offerings during the year as all of these were oversubscribed.
Topline Securities terms this as a good year for IPOs, driven by macroeconomic stability under the IMF program, coupled with positive market sentiment, high liquidity, falling interest rates and political stability, which encouraged equity investment.
The benchmark KSE-100 Index surged significantly by 83% in PKR terms and 85% in US$ terms in 2024 to date, reflecting overall positive sentiment and renewed investor interest.
The average daily traded volume has also increased by 69%, rising to 545 million shares, while the daily traded value increasing by 108% to PKR21 billion during 2024 to date.
In 2024, new listings on the Main Board included Secure Logistics (SLGL), TPL REIT Fund-I (TPLRF1), International Packaging (IPAK), Fast Cables (FCL), and BF Biosciences (BFBIO). Meanwhile, Mughal Energy (GEMMEL) and Burj Clean Energy (GEMBCEM) were added to the GEM Board.
Pakistan market outperformed the global trend, which saw a slowdown in IPO activity. As per Ernst & Young (E&Y), a total of 870 IPOs were issued during 9M2024 raising US$78 billion as against 983 IPOs raising US$101 billion during the same period last year. This decline reflects the global slowdown in new IPOs, attributed to the transition where factors such as economic deceleration, US presidential elections, geopolitical frictions and regulatory shifts casting a shadow of uncertainty over the investment realm, posing potential challenges to the IPO market.
Topline Securities believes, more IPOs coming to market in 2025 as market valuations have sizably increased. Furthermore, abundant availability of liquidity amidst conversion from fixed income will also encourage companies to offer shares in market.
A striking feature was that 5 offerings at main board were oversubscribed. These companies represented various sectors including Transport, Real Estate Investment, Paper Board & Packaging, Cable & Electrical Goods, and Pharmaceuticals.
Secure Logistics Group (SLGL): The Company involved in two main business segments Logistics & Tracking and Fleet Management Services. The primary purpose of the IPO was to deleverage the balance sheet amid an unprecedented high-interest-rate environment, enhance the company’s infrastructure and technology base to support the Tech-Pivot initiative, facilitate expansion into the regional market, and optimize fleet-related efficiencies. The company offered 50 million shares at strike price of PKR12/ share, raising PKR600 million in August, 2024 with an oversubscription of 1.02x.
TPL REIT Fund I (TPLRF1): The REIT Scheme is part of TPL Group which is Pakistan’s prominent technology conglomerate with businesses across a variety of sectors. The principal activity of the fund is investing in real estate projects through Special Purpose Vehicles (SPVs) in accordance with the constitutive documents and applicable laws to generate income/returns for investors through rental income and capital appreciation. The purpose of offer for sales are: 1) Compliance with REIT Regulations, 2) Unblocking of Units, 3) Interest of Foreign Investors, and 4) Price discovery. The company offered 19.4 million shares at fixed price of PKR17.6/ share, raising PKR589 million in May, 2024 with an oversubscription of 1.46x.
International Packaging Films (IPAK): The Company is principally engaged in the manufacturing and sale of flexible packaging materials mainly comprising of BOPP (Biaxially-oriented Polypropylene) films and allied products. IPAK seeks listing with the sole purpose of raising funds to repay long-term debt, which the company obtained to finance its expansion project. Expansion project was aimed at increasing the capacity of BOPP films from 41,000 tons to 100,000 tons and introduce Biaxially Oriented Polyethylene Terephthalate (BOPET) films with capacity of 42,000 tons. The total cost of expansion was around PKR22 billion. The Company offered 70.1 million shares at strike price of PKR25.2/ share, raising PKR1,767 million in June, 2024 with an oversubscription of 1.73x.
Fast Cables (FCL): Fast Cables is a preeminent local manufacturer of top-quality electrical cables and conductors in Pakistan. The Company raised funds to be utilized for: 1) the acquisition of new land, 2) the construction of a state-of-the-art building, 3) the installation of new plant and machinery, 4) the repayment of debt associated with the machinery, and 5) the development of building components. The Company offered 128 million shares at strike price of PKR24.5/ share, raising PKR3,130 million in June, 2024 with an oversubscription of 1.57x.
BF Biosciences (BFBIO): BF Biosciences Limited is a joint venture between Ferozsons Laboratories and Argentina’s Bagó Group, incorporated in 2006. The Company raised funds to be utilized in: 1) purchasing raw and packing materials to meet post-expansion working capital needs, 2) purchasing plant and machinery to broaden the product base and improve process efficiencies, and 3) acquiring export certifications such as PIC/S and SRA, as well as supporting new product development, including Glucagon-like Peptide (GLP-1). The Company offered 25 million shares at strike price of PKR77/ share, raising PKR1,925 million in August, 2024 with an oversubscription of 3.4x.