Agha Steel makes a strong entry to stock market

KARACHI: The Agha Steel Industries Limited’s initial public offering (IPO) will result in Agha Steel becoming the third company to be listed on the Pakistan Stock Exchange in the fiscal year 2021.

The issue of Agha Steel Industries Ltd consists of 120 million ordinary shares or 20.83pc of the total post-IPO paid-up capital. The issue was offered through 75pc (90 million shares) book building method and 25pc (30 million shares) retail/general public portion. The floor price in the issue was set at Rs30 per share.

During the book building phase, held on October 6 and 7, the scrip was oversubscribed 1.63 times. As a result, the strike price for the public and retail subscription held on October 14 and 15 was Rs32 per share.

Applications for a total of 38.32 million ordinary shares were received against the issue size of 30 million ordinary shares. The issue was oversubscribed by 1.28 times. The total amount raised through the IPO was Rs3.84 billion against the targeted amount of Rs3.60 billion, reflecting the extraordinary success of the IPO.

Speaking about the successful IPO of Agha Steel Ltd, Farrukh H Khan, CEO of PSX, stated, “The year 2020 has shown tremendous growth in terms of offerings on the equity board and debt sector of PSX. With the addition of this IPO, there will be three listings on the equity board of PSX for the fiscal year 2021. The successful IPO of Agha Steel Industries Ltd goes to show the overwhelming confidence and interest shown by institutional investors, high net worth individuals and the public in the capital market of Pakistan.”

He further stated, “This year has also been a challenging one with different factors responsible for making it a difficult year for the economy as a whole and the capital market in particular; from the Covid-19 pandemic to the terrorist attack on the exchange and the thunderstorms that could have weighed in on the market, yet the capital market of Pakistan has withstood pressures emanating from all these factors and shone brightly right through them.”

Hussain Agha, CEO of Agha Steel Industries Limited, while speaking about the remarkable performance of the company in its IPO, said, “We are overwhelmed by the response that entailed, and thank all the partners involved in the process for making Agha Steel Industries IPO a big success. The financial corporate market of Pakistan is very vibrant and we are very positive on the overall financial growth of the industry. It was heartening to see the systematic and streamlined process of listing in PSX as we are assured more companies will be looking to get listed in the near future. This is a great step for Pakistan.”

Shahid Ali Habib, CEO of Arif Habib Limited — the Lead Manager & Book Runners to the issue, said, “This was the largest IPO for a steel company in Pakistan. We saw a broad-based investor participation with 298 investors taking part in the book building and over 5,200 participants in the general public subscription. In value terms, the book building was oversubscribed by 1.6x and the General Public subscription was oversubscribed by 1.3x.

“The market and the investors have shown strong resilience post-easing of Covid-19 lockdown and Arif Habib Limited remains poised to bring several other companies for listing in the next few months.”

The lead manager & book runner to the issue as well as the underwriters to the book building portion of the issue were Arif Habib Limited. Bankers to the book building part of the issue was Habib Bank Limited whereas bankers to the retail portion were UBL, Habib Metropolitan Bank Limited, HBL, Bank Al-Habib Limited, Meezan Bank Limited, Faysal Bank Limited, Soneri Bank Limited, Askari Bank Limited and MCB Bank Limited.

The company is to utilize the IPO proceeds for its phase-II expansion, having undertaken the phase-I expansion earlier. The phase-II expansion includes increasing the production capacity and continuing the technological upgrade and advancement. The technological advancement includes installation of state of the art and first in Pakistan Mi.Da. Rolling Mill which is an advanced and competitive way to produce steel rebars from the perspective of capital and operating expenditure. The Company is also set to install an in-house Air Separation Unit project. The total cost of the project is Rs7.04 billion, wherein 51pc of the total funding requirement is set to be raised through the IPO and the remaining cost through long and short term debt financing.