Organic Meat Company closes IPO book-building

Pakistan first IPO of 2020 oversubscribed 1.7 times

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KARACHI: The Organic Meat Company Limited (TOMC), a halal meat processor and exporter, closed the book building process of its initial public offering (IPO) of shares on Tuesday. 

TOMC, one of Pakistan’s largest meat exporters, was to offer 40 million shares, or 35.7pc of its stake in the IPO, at a floor price of Rs18 per share, with a maximum price band of up to 40pc. 

Book-building registration for TOMC started on June 30 and closed on July 7, while the book-building bidding took place on July 3, 6 and 7. 

On July 3, or book building day one, bids for 20.63 million shares for the 40 million shares were received. By the end of July 7, bids for around 68.1 million shares were received from qualified investors for the 40 million offer, or bids worth around Rs1.4 billion. The strike price of the issue was Rs20, which is Rs2 higher than the floor price of Rs 18. The bidding featured both local and foreign high-net investors. 

In the next phase, the public subscription for the IPO for general investors will take place between July 14 and July 16.

In an IPO, a company offers shares to the public in return for capital it can use, usually for expansion or operational purposes. Book-building refers to a period when the IPO is open and bids are collected from qualified investors at various prices, which are above or equal to the floor price. After this, a strike price is determined, that is used for shares to the general public. 

Analysts considered the turnout to be higher than expected, as investor response was sustained, despite an economic contraction, and the Covid-19 pandemic. In particular, the high participation rate of local and foreign investors suggest there is a growing appetite for IPOs in Pakistan. 

TOMC’s IPO is Pakistan’s first IPO of 2020 and the first after fifteen months. Through the IPO, the company is looking to raise Rs720 million, mainly to set up an offal processing facility, and an offal production facility, both in Karachi. The remaining funds will be used to increase TOMC’s product portfolio.

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