KARACHI: Pakistan Stock Exchange (PSX) Managing Director Farrukh H. Khan said on Wednesday at least three initial public offerings (IPOs) are expected to take place soon as an increasing number of companies realise that raising funds through the shares market is more efficient than relying on high-cost bank borrowing.
Speaking to journalists on the sidelines of a gong ceremony to mark the IPO of technology company Symmetry Group Ltd, Mr Khan said the listing process of Fast Cables Ltd, a manufacturer of electrical cables and conductors, is in an advanced stage. Without naming the other two companies that’re moving ahead with their IPO plans, Mr Khan said the firms belong to the industrial sector.
The latest data obtained from the PSX shows the only company that’s currently applied for a listing is Treet Battery Ltd. In addition, the PSX has already approved “prospectuses” by as many as seven companies for the fresh raising of capital. These companies are Pakistan Reinsurance Company Ltd, International Packaging Films Ltd, Regal Automobile Industries Ltd, Secure Logistics Group Ltd, Searle Pakistan Ltd, Dalda Foods Ltd and Fast Cables Ltd.
Two of these prospectuses were approved back in 2021 while another two were green-lighted in 2022. Three companies received the PSX’s approval in 2023, excluding Symmetry Group Ltd, which has already been listed. The sponsors of these companies are waiting for an opportune time to float their shares preferably at a premium.
Public listings, which help company owners raise fresh funds in exchange for new or existing shares, remained almost non-existent in 2022-23. Just one company, Globe Residency REIT, held its IPO last fiscal year to raise Rs1.4 billion. Symmetry Group’s listing constitutes the first and so far the only IPO in the current calendar year.
No listing has been approved for the Growth Enterprise Market (GEM) — a separate PSX counter reserved for smaller and riskier firms. Only three companies have so far listed on the GEM counter since its launch a few years back.
The main board currently has 523 listed companies. One firm – Ados Pakistan Ltd – is up for voluntary delisting. As many as 16 “companies/securities” were delisted from the PSX in the last year, PSX data shows.
Encouraging tech firms to seek public funds via the stock exchange, the PSX chief said “old-economy stocks” usually trade worldwide at low multiples, which refer to the price-to-earnings (P/E) ratio measuring a company’s share price relative to its per-share earnings. In contrast, multiples of tech companies in Pakistan are “comparable” to the multiples of their regional and international counterparts, he said.
He urged tech companies to make the “judgment call” in favour of raising capital even at low valuations instead of holding back at the risk of compromising long-term growth. The share of Symmetry Group started trading on the PSX on Sept 1 after the firm sold 35.5pc of its total post-IPO shareholding against Rs435.3 million.
Published in Dawn, September 7th, 2023
