KARACHI: Contrary to last year’s gloomy conditions, the booming equity market attracted many initial public offerings (IPOs) and companies raised over Rs8 billion in calendar 2024.

Market experts said such a favourable situation emerged after 2021, making it attractive for investors while the Pakistan Stock Exchange set records daily, encouraging companies to tap into the equity market.

A total of seven listings have been completed in 2024 so far. Of these, five IPOs were on the main board and two (initial offerings) on the Growth Enterprise Market (GEM) board, which is a separate PSX counter reserved for smaller and riskier companies, said a research report by Arif Habib Ltd.

Most of the market players said the equity market is bullish on solid grounds, while some cautious approach was also noted, especially for small investors.

“Key macros including downward inflation trajectory, monetary easing, stable currency alongside successful negotiation of IMF Extended Funding Facility amounting $7bn have created an attractive environment for equity offerings, drawing investor interest and facilitating robust capital raising activities on the Pakistan Stock Exchange,” said Tahir Abbas, head of research at Arif Habib Ltd.

“The KSE-100 index surged by 42.4pc during CY24TD, reflecting an overall positive sentiment and renewed investor interest. Also, the index profitability skyrocketed by 24.4pc during FY24 to a historic high level of Rs1.6 trillion,” he said.

In 2024, the main board welcomed new listings, including 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) have been added to the GEM board.

Capital raised via IPOs this year reached its highest since CY21, underscoring a strong appetite for new investment opportunities in the market.

Total demand for IPOs in 2024 amounted to Rs13bn, with Rs8.4bn raised, resulting in a 1.6 times oversubscription.

In addition to IPOs, 10 companies issued rights shares, raising Rs18.3bn, showcasing a consistent demand for capital expansion across various sectors.

In CY24, four companies — Stylers International, LSE Capital, UDL International, and Big Bird Foods — were listed at PSX through a merger compared to three companies last year.

“The IPO market in Pakistan has seen a significant revival in CY24, supported by an improved economic landscape and a tremendous performance by the stock market,” said AHL report.

However, the report did not discuss hurdles like political uncertainty derailing economic growth over the last three years.

Published in Dawn, October 27th, 2024