KARACHI:
The Pakistan Stock Exchange (PSX) is all set to welcome the first new company to its trading platform in the New Year 2024 after emerging as the world’s best performing stock exchange in the second half (July-December) of 2023.
Speaking to The Express Tribune, Shahid Ali Habib, CEO of Arif Habib Limited (AHL), said Secure Logistics Group (SLG) in Pakistan is preparing for an initial public offering (IPO) in the first quarter of 2024. The company aims to sell 63 million shares to institutional investors, high-net-worth individuals and retail investors, aiming to raise a minimum funding of Rs 750 million on the PSX.
The funds raised from the IPO will be used to repay debt, add 25 delivery vehicles, upgrade IT infrastructure and set up a warehouse in the Lahore area, Habib said.
AHL is the exclusive financial advisor and book runner for the IPO.
The last IPO on the PSX took place about five months ago, when Symmetry Group went public in early August 2023. It was the only IPO to take place in the entire previous year, which was marked by increased political and financial crises.
Islamabad-based SLG specializes in providing logistics and vehicle fleet management services in Pakistan. After the IPO, SLG will become the first listed logistics company in the country, he said.
Currently operating a fleet of 283 vehicles, SLG’s revenue is projected to grow to Rs 2.1 billion in 2023, with an expected growth of 28% in 2024, the AHL CEO said.
Earlier plans for an IPO in 2022, aiming to raise Rs 1.5 billion, were temporarily shelved due to political and economic uncertainties that could affect the exact pricing of the shares through a Dutch auction.
SLG re-entered the IPO market after PSX’s impressive 55% growth in 2023, particularly in the second half, closing the year at a new high of 62,451 units on December 29.
Reading PSX begins flights in 2024
Moreover, signs of economic recovery have been seen since July 2023, according to the State Bank of Pakistan. Research analysts predict that the market will reach new highs ranging between 75,000 and 81,000 units by the end of December 2024, considering that stock prices still remain below historical levels.
Factors such as the general election in February 2024, a possible receipt of another IMF bailout after the current one ends in March 2024 and an expected 4-5% cut in the central bank’s key policy rate to 17-18% by end of June 2024 are expected to support a recovery in the domestic economy and maintain an upward trend in the stock market.
Topline Research recently reported that PSX saw only one IPO in 2023, raising a paltry Rs 435 million. This amount is the lowest raised in a year in the last decade and a half, compared to the previous record low of Rs 800 million in 2013.
The number of IPOs on the PSX has remained at just one IPO per year since 2019, in stark contrast to the previous 5-year and 10-year averages of four IPOs per year. Analysts attribute this trend to macroeconomic instability, the looming risk of bankruptcy, cheap valuations and political uncertainty, which discourage equity investment.
The only IPO in 2023 was that of Symmetry Group on the main board. As Pakistan’s first listed digital technology company, Symmetry Group focuses on digitizing the operations of consumer-centric organizations. The company offered 101.24 million shares at a strike price of Rs 4.3/share, raising Rs 435 million in August 2023, oversubscribed by 1.58 times.
Published in The Express Tribune, January 6u2024.
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