KARACHI
To complete the on-going divestment of Pakistan Stock Exchange PSX, a total of 160,295,320 ordinary shares – 20 percent of the total paid-up capital – are up for Initial Public Offering (IPO).
Initially, 75 per cent of the issue i.e. 120,221,320 shares were offered to high-net-worth/institutional investors through Book Building at Rs 28 (floor price) on June, 6th, and 7th. The remaining 25 per cent 40,074,000 shares will be offered to retail investors/General public at a strike price determined through Book Building on June 9th and 12th.
However, after failing to achieve the set target of 120 million shares by the end of the second session of IPO on Wednesday, June 7th – which received 76.95 million offers by the end of working hours – PSX issued a notice announcing the extension of the Book Building session till June, 8.
In view of investors’ interest observed in PSX divestment process, the Pakistan Stock Exchange Limited is pleased to announce that the Securities and Exchange Commission of Pakistan has allowed extension in time for the book building for offer for sale of shares of the Pakistan Stock Exchange Limited for one day i.e. upto Thursday, June 8, 2017. Accordingly the eligible investors can now register until 3:00 pm and can bid until 5:00 pm on Thursday, June 8, 2017.
Till close of business Wednesday, bids of 74,015,392 shares have been received from 67 bidders. Further 26 Institutional and High Net-Worth investors have been registered themselves with book runner (MCB Bank Limited) to participate in PSX book building process.
According to market sources, the low number of offers came on the back of multiple reasons which included the changed criteria of High Net-Worth individuals to a minimum investment of Rs 3 million instead of Rs 1 million previously.
Additionally, according to experts the price to earnings ratio of the PSX seems far-fetched at a per share price of Rs 28, and local investors hesitate in such cases.
Moreover, in order to maintain the fairness of the process, the regulations of the PSX state that no individual from the managing team of this IPO or their relatives, friends etc. can participate in this Book Building process thus resulting in a lower number of investors showing interest in the 120 million shares.
However, analysts and experts believe that in the extended session of the book building process on Thursday, the company will be able to sell out the remaining 43 million shares and complete another phase of the divestment.
PSX has already sold out 40 per cent of its shares to a Chinese consortium at an investment of Rs 85 million (per share price Rs 28) and another 40 per cent were distributed among the original owners, 200 stock brokers, of the PSX. The remaining 160 million shares of the bourse will be sold out by the end of this month.
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