KARACHI:
Sui Southern Gas Company (SSGC) has announced plans to list its subsidiary, SSGC LPG, on the Pakistan Stock Exchange (PSX) in the future. This move aims to facilitate new funding for current and upcoming projects by offering shares to the general public.
In a disclosure to the PSX, the natural gas utility said the board of directors of Sui Southern Gas Company Limited (SSGCL) has approved “the conversion of the status of SSGC LPG (Private) Limited from Private Limited to Public Limited. This approval is granted to begin the process of issuing 33.33 million shares of common stock of the converted company through an initial public offering (IPO) at an appropriate time in the future.
SSGC LPG is actively involved in the marketing and distribution of LPG (LPG) across Pakistan since 2012. The subsidiary operates under the management of an autonomous board of directors.
In a related development, Topline Research reported that the Pakistan Stock Exchange (PSX) saw only one IPO in 2023, raising a modest amount of Rs 435 million. This marks the lowest fundraising in a year in a decade and is half of the previous record low of Rs 800 crore seen in 2013.
In terms of number of IPOs, the PSX experienced a single IPO for the second time since 2019, a significant departure from the previous five-year and ten-year averages of four IPOs per year.
“We attribute this poor IPO trend to macroeconomic volatility, combined with the looming threat of bankruptcy, cheap valuations and political uncertainty discouraging equity investment.”
The only IPO in 2023 was Symmetry Group on the main board, Pakistan’s first listed digital technology company focused on digitizing consumer-centric operations. 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.
Reading: PSX prepares for ‘major IPO’ as high interest rates loom
Globally, a similar trend of IPO depletion has been seen, with 968 IPOs raising $101 billion in the first nine months of 2023 compared to 1,018 IPOs raising $148 billion in the same period last year. This decline is attributed to increasing macroeconomic challenges, tighter liquidity and higher cost of capital.
In the first half of 2023, the benchmark KSE-100 rose only 3% in Pakistani rupee terms, but fell 19% in US dollar terms. The average daily trading volume was 163 million shares, with an average daily trading value of Rs 6 billion. However, in the second half of 2023 year to date, the index has rebounded sharply, rising 51% in Pakistani rupee terms and 52% in US dollar terms. The average daily trading volume in the cash/ready market improved to 377 million shares, with Rs 12 billion.
“We believe that this positive sentiment, if sustained, is likely to be capitalized on by companies looking to access external capital, leading to an increase in companies applying to list on the PSX in 2024.”
Pakistan has recently introduced a shorter IPO process, imposing a 14 business day limit for the SECP to grant regulatory approval to the listing application and prospectus. Additionally, there is a 15-day limit on PSX for the post-approval process for listing. This standardization is expected to make it easier for more companies to raise capital through IPOs in 2024.
Published in The Express Tribune, December 7u2023.
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