KARACHI: This year companies at the Pakistan Stock Exchange (PSX) raised Rs35.4 billion in 2020 via IPOs and rights from PSX, compared to Rs 35.7 billion raised in 2019.
The bourse witnessed four IPOs (including preference share listing) during the year in spite of COVID-19 outbreak, where the cumulative amount raised clocked in at Rs 8.4 billion. The number of equity IPOs (four) this year, is the highest in the last five years. In 2019, PSX witnessed just one IPO of Rs 5 billion.
Amongst these from listing to date, The Organic Meat (TOMCL) has generated the highest total return of 50%, followed by Agha Steel’s (AGHA) return of 15%. TPL Trakker (TPLT) has lost 17% of its value since its listing.
In 2020, 14 companies raised Rs 27 billion through Right Shares with Fauji Fertilizer Bin Qasim (FFBL) fetching the highest amount of Rs 5.0 billion, followed by Searle Pakistan (SEARL) rights of Rs 4.7 billion and Unity Foods (UNITY) rights of Rs 4.5 billion.
In 2019, 17 companies had raised Rs 30 billion through Right Shares wherein Hascol Petroleum (HASCOL) took the highest amount of Rs 8 billion followed by Hub Power’s (HUBC) issue of Rs 7 billion and Maple Leaf Cement’s (MLCF) issue of Rs 6 billion.
With improving outlook on the stock market, many equity IPOs are in the pipeline. Seven companies, like Shell Petroleum (SHEL), have already announced Right Shares amounting to Rs 16 billion.
PSX witnessed four IPOs (including preference share listing) in 2020 in sectors like Steel, Meat processing, Telecom, and Chemicals. Together these companies raised Rs 8.4 billion.
The Organic Meat Company (TOMCL): First IPO of 2020 was TOMCL, which came at a strike price of Rs 20/share, 11% higher than the floor price of Rs 18/share. The company offered 40 million shares to raise Rs 800 million. The purpose of the IPO was to expand the existing capacity and to set up a new offal processing facility. The stock has provided a total return of 50% since its listing on Aug 03, 2020.
Largest IPO of the year was of the Rebar manufacturer AGHA, raising money for its Phase II expansion wherein the company is planning to bring state of the art Mi. Da rolling mill. The company offered 120 million shares at a strike price of Rs32/share (floor price Rs 30/share), raising Rs 3.8 billion. AGHA has provided a total return of 15% since its listing on Nov 02, 2020.
TPL Trakker (TPLT) is focused on providing technology solutions and IoT services. It raised Rs 802 million by offering 66.82mn shares at a price of Rs12/share (fixed price). The stock has lost 17% of its value since its listing on Sep 21, 2020.
Engro Polymer (EPCL) [Preference Share] offered preference shares of Rs 3 billion (87.5% offered to Pre IPO investors) to investors to finance its PVC and VCM expansion through equity to avail tax credits under section 65E. The stock is not yet listed at the exchange.
Amount raised through Rights Issue declined by 12% in 2020. Most of the companies raised new funds to either meet equity shortfall, undertake new projects or cater to working capital requirements.
Out of the 14 companies that issued Right Shares, a synopsis is presented below for the top five companies.
The largest right announcement during 2020 was made by Fauji Fertilizer Bin Qasim (FFBL) to the extent of Rs 5 billion. The company raised this amount for its working capital requirement and to buffer up overall debt to equity ratio of 6.7x.
Searle Company (SEARL) is raising Rs5bn to partly finance its OBS acquisition and to buffer up its debt to equity ratio of 1.1x.
Unity Foods (UNITY) is the third right issue by the company and unlike previous two (which were for expansion), this right issues will cater working capital requirements of the company, which has increased due to commercial operation of new facilities. The company raised Rs 4.5 billion via this right issuance.
The Pakistan Refinery (PRL) has raised Rs 3.2bn to undertake short and medium-term projects for improving yields of HSD and Mogas.
Hino Pak Motors (HINO) raised Rs 2.9 billion to finance its working capital requirement and to buffer up its debt to equity ratio of 4.08x as equity of the company has eroded in the last two years due to losses.
