LAHORE: Pakistan Aluminium Beverage Cans (PABC) will raise at least Rs3.3 billion through sale of 26 per cent stake controlled by one of its major shareholders in an initial public offering (IPO). The book building will take place on June 22-23 followed by public subscription on June 29-30.

Through the IPO, Ashmore Mauritius PABC, a specialist emerging markets investment manager, is exiting the company by selling its entire stake at a floor price of Rs35 per share. Successful bidders will be provisionally allotted only 75pc of the issue size and the remaining shares will be offered to the retail investors at the strike price. But based on the interest from investors during the book building process, the strike price can jump by 40pc up to Rs49 a share, helping Ashmore rake up Rs4.6bn.

Other major investors Liberty Group and Soorty Enterprises own 54pc and 20pc stakes in the company.

The company started its operations in 2017 as the country’s only local manufacturer of aluminum beverage cans, substituting can imports by bottlers in Pakistan. It supplies cans to the bottlers of all major carbonated drinks in Pakistan and Afghanistan. Exports to Afghanistan constituted 35pc of the company’s sales in 2020.

Established on a 20.9 acres in Faisalabad’s Special Economic Zone with a current rated capacity of 700 million cans per annum, the company enjoys a 10-year tax holiday and plans to enhance its rated capacity by almost 36pc to 950m cans by July 2022.

It has grown its revenues at an annualised rate of 18.7pc in the last five years. It expects its bottom line to grow at 140pc in CY21.

The Euromonitor International puts the size of Pakistan’s soft drinks market at 3.8bn litres per annum and expects the market to grow at a five-year annualized rate of 7pc to reach 5.3bn litres in 2025 on the back of rising purchasing power, urbanisation and favourable demographics.

“With the estimated market size of 275m cans, aluminium beverage cans in Pakistan account for only 3.6pc of total soft drinks sales as opposed to the global average of 19pc, which indicates the room to expand,” the company CEO Azam Sakrani told Dawn. He said the company was also expanding its exports to the US, Central Asia and the Gulf states. “Thus we are not only saving foreign exchange through import substitution but also fetching dollars by boosting our exports.”

“Afghanistan so far remains our biggest export market since that country does not have local beverage glass manufacturing facilities. We command over half of the Afghan market share thanks to contracts with key beverage bottlers.”

“Growing domestic can penetration may increase our sales to 650m cans by 2025, delivering a growth rate of 19pc. We will be the key beneficiary as the can imports are virtually non-existent owing to high freight costs and duties,” he added.

Published in Dawn, June 20th, 2021