The Pakistan Stock Exchange (PSX) had the highest ever equity during FY2021 that was raised via initial public offerings (IPOs) of Rs. 20 billion.
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It is notable that these IPOs had generated a demand of Rs. 44 billion against the Rs. 20 billion raised. This year, the PSX also had the highest number of transactions in 14 years according to a report by the brokerage house Arif Habib Limited. Prior to this, the highest transactions within one year had been 12 transactions in FY2007.
Overall, the PSX has recorded the investment and debt raised by the companies at more than Rs. 80 billion from institutional, individual, and retail investors in the current fiscal year ending 30 June.
Most of the companies had raised funds for the expansion of their production capacities as the low interest rate in Pakistan had encouraged investors to finance expansions on the expectation of a better return in the future.
Regarding the IPOs, there were eight this year with seven new listings, including The Organic Meat Company, TPL Trakker Limited, Agha Steel Industries Limited, Panther Tyres Limited, Service Global Footwear Limited, Citi Pharma Limited, and Pakistan Aluminum Beverage Cans Limited.
Additionally, 25 companies had issued right shares that had brought Rs. 50 billion in capital during the current fiscal year. These are the shares that are offered to the existing shareholders at a price lower than the current market share price. Furthermore, a company had also raised Rs. 11 billion in debt at the PSX.
The expected IPOs in the upcoming fiscal year will also be backed by an economic turnaround along with a low interest rate and an expansion in the existing production capacities at factories, besides the establishment of new projects by companies under the State Bank of Pakistan’s (SBP) Temporary Economic Refinance Facility (TERF).
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In June, the benchmark index had hit a four-year high of 48,982 points, which is in sharp contrast to the five-year low of around 27,000 points that was recorded in March 2020 on the back of the outbreak of the pandemic in February 2020 in Pakistan.
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