AGP IPO: Book-building process ends up in strike price of Rs80

LAHORE: The book-building process of the Initial Public Offering (IPO) of AGP Limited, one of Pakistan’s leading pharma companies has resulted in a strike price of Rs80 per share on Thursday.

A notification filed on the bourse Friday by BMA Capital revealed a total of 292 investors participated in the book-building, of whom 238 were deemed successful.

AGP is offering 35 million shares constituting 12.5 percent of its total paid up capital in a two-phase IPO, with the first phase ending on Feb 8^th with an oversubscription of 1.598 times and in second phase bidding would be opened to public on Feb 16^th-18^th.

The offer value was for 35,000,000 and bidding volume was recorded at 55,956,120 at a strike price of Rs 80 per share, resulting in an over-subscription of 1.598 times, as reported on the PSX bidding website.

“At a strike price of Rs80, AGP’s offer for sale comes at a multiple of 19x, which to some may seem cheap compared to peer average of 20-25x, while to others it may seem expensive given the offer brings no fresh equity for growth, ex-Topline Securities analyst Adnan Sheikh told Pakistan Today.

He added, “Given the historical dearth of offerings in the drug space and looking at the book building figures, circa 60% over subscription vs Matco barely making it across the finish line, indicates that either the book runners have done a good job or the market seems to be jumping at a long overdue pharma offering. If forecasts pan out, forward multiple of 15x would entail a healthy discount from peers with room for growth.”

The subscription offer is being carried out 100 percent through book-building, but successful bidders were slated for provisional allotment of 75 percent of offer size only which equates to 26.25 million shares. The remaining 25 percent or 8.75 million shares was to be offered to retail investors.

AGP is aiming to raise Rs2.8 billion by offering 35 million of its shares via book-building and it has hired domestic brokerage BMA Capital to run its book-build whose first phase ended on Thursday.

The issuer has enlisted the services of JS Global Capital as consultant for its listing.

This will be 2018’s second major IPO and follows delay in the process of AGP’s intent in August last year to list on the Pakistan Stock Exchange (PSX).

In August 2017, AGP Limited notified of its decision to get itself listed on the stock exchange but in early-November last year it was stopped by SECP from proceeding further with its IPO.

The process had been halted claiming the matter of repatriation of divestment proceeds of Rs6.501 billion to Pharmonte Limited by AGP Private Limited was taken up with the State Bank of Pakistan.

AGP began its commercial operations in 1989 as an independent pharmaceutical manufacturing company in Karachi, Pakistan. It distributes its products via Muller and Phipps’ network of 32,400 pharmacies, Pakistan’s biggest distributor of pharmaceuticals.

The operations of AGP include manufacturing, marketing and sales of pharmaceuticals and healthcare products in the domestic and export market.