KARACHI: Technology firm Supernet Ltd told shareholders on Friday it’s decided to migrate to the main board of the Pakistan Stock Exchange (PSX) from the Growth Enterprise Market (GEM) board, which is a separate PSX counter reserved for smaller and riskier companies.

Only three firms are currently listed on the GEM board that the PSX rolled out last year to help start-ups and growing entities raise capital from institutional and high net worth individuals.

Supernet, which was listed six months ago, will become the first company to leave the side board for the main trading counter on the PSX.

Speaking to Dawn, Supernet Ltd CEO Jamal Nasir Khan said he expects higher trade volumes in the share once the company upgrades its listing status.

“Our preference was for the main board when we decided to raise capital through the stock market. But we opted for the GEM board because the listing process for the main board seemed too long and tedious at that stage,” he said.

A wholly owned subsidiary of Telecard Ltd, Supernet sold 18.8 per cent (post-listing) shareholding on the stock exchange for Rs475 million in April.

The company, which offers integrated communications infrastructure and cyber-security solutions, posted a net consolidated profit of Rs287.8m in 2021-22, up 23.3pc from a year ago.

It floated its shares at Rs22.50 apiece. But the stock price was Rs17.76 on Friday, down 21pc in nearly six months. Mr Khan attributes the share’s performance since the listing to the poor market conditions as well as a general lack of interest among investors in the buying and selling of a GEM-listed stock.

“The stock suffered because of poor liquidity, lower number of investors and limited price discovery on the GEM board,” he said.

Investors prefer main-board stocks to the GEM-listed securities, he noted. Only 85 trades took place on the GEM board on Friday, which equals 0.07pc of the number of trades carried out on the main board.

“I think our stock will receive increased interest from investors once it migrates to the main counter,” said Mr Khan.

A spokesperson for the PSX told Dawn the company’s migration to the main board will likely lead to a higher number of investors. The move will make the stock accessible to the general public that’s currently barred from trading the security.

Only institutional players and “accredited individual investors” with assets of Rs5m can trade securities listed on the GEM board.

“The PSX encourages companies to use the GEM platform as a first step in their growth journey to corporatisation as they migrate onto the main board,” she added.

Published in Dawn, October 8th, 2022