Supernet Technologies born after SuperInfra’s acquisition of Hallmark

The erstwhile Hallmark Company Limited has undergone a rebranding, emerging as Supernet Technologies following the completion of Supernet Infrastructure Solutions’ (SuperInfra) acquisition of Hallmark. SuperInfra — a wholly-owned subsidiary of Supernet — orchestrated this reverse merger by procuring 314,220 shares, constituting 62.844% of Hallmark’s equity through a share purchase, and an additional 92,890 shares or 18.578% through a public offer.

The cumulative 407,110 shares, representing an impressive 81.4% stake, were snapped up at Rs 47.74 per share, culminating in a total expenditure of Rs 1.94 crore.

“In the  Information Technology (IT) sector, where we aspire to establish our presence, the scarcity of potential enterprises is palpable,” observes Waseem Ahmad, the esteemed Company Secretary of Supernet and Chief Executive Officer at Supernet Technologies. 

“Among the limited options, Hallmark emerged as a viable candidate, prompting us to seize the opportunity,” Ahmad adds. Ahmad further elaborates on their plans for Hallmark, “Our strategic blueprint for Hallmark is still under meticulous construction, with particular emphasis on its business trajectory. However, it is unequivocal that we intend to infuse it with a fresh and invigorating identity,” Ahmad continues. 

“We envisage a harmonious integration of Hallmark within our existing organisational framework, the specifics of which will be duly communicated via the Exchange. Our primary ambition is to weave both SuperInfra and Hallmark into the fabric of Supernet, thereby elevating Supernet’s listing from the Gem Board to the Main Board of the Pakistan Stock Exchange (PSX),” Ahmad concludes. 

As part of the housekeeping, the company formerly known as Hallmark was also relocated to a new address with effect from August 1, 2023. The new address is 4th Floor, Tower B, World Trade Centre, Khayaban-e-Roomi, Block-5, Clifton, Karachi South. SuperInfra and Supernet itself are located on the 9th floor of the same building. Furthermore, Supernet has replaced Hallmark’s Chairman, CEO, three Non-Executive Directors and two Independent Directors.

This decision marks a significant milestone in SuperInfra’s reverse merger with Hallmark. With the acquisition now finalised, the initial phase of the reverse merger has reached its conclusion. The company is poised to inform the High Court and set in motion its previously outlined restructuring process. Upon completion of these steps, the reverse merger will be complete.

There are two things to unpack here: who’s who and what on earth is a reverse merger?

What is a reverse merger, and why did SuperInfra opt for it? 

A reverse merger, often referred to as a reverse takeover or a reverse IPO, is a sophisticated manoeuvre employed by private firms aiming to gain public trading status without navigating the traditional, and frequently labyrinthine, IPO process.

In this intriguing dance of acquisition, a private entity seizes control of a majority stake in a publicly listed corporation, subsequently amalgamating with the acquired entity. The proprietors of the private firm metamorphose into the controlling shareholders of the public corporation. Following the completion of this acquisition, they reorganise the public company’s assets and operations to incorporate the erstwhile private entity.

“An IPO is a laborious process demanding both time and resources. Moreover, the market conditions have been less than favourable for an IPO for over a year. A reverse merger appears to be a more direct and expedited pathway to achieve our ultimate objective,” Ahmad elucidates. 

Ahmad’s assertion holds water. This procedure is typically less convoluted, more time-efficient, and less financially burdensome than a conventional IPO. It decouples the process of going public from the capital-raising function, rendering it an enticing alternative for corporate managers and investors alike. However, it’s crucial to underscore that a reverse merger does not result in any fresh capital influx.

Who’s who? 

SuperInfra, a player in the solar panel industry, operates as a fully-owned subsidiary of Supernet, which holds a commanding 99.98% stake in the company.

Supernet, a technology titan offering ICT solutions, has been at the forefront of the private sector telecommunications providers since its inception in 1995. Alongside its group companies, it provides an extensive array of services ranging from Solar Power and IT Security to LAN & WAN Connectivity and IT Infrastructure solutions, catering to both local and global businesses.

Interestingly, Supernet itself falls under the umbrella of Telecard Ltd. Having gone public just last year, Supernet successfully raised a substantial Rs 47.5 crore by selling 18.81% of its total post-listing shareholding at Rs 22.50 per share.

On the other hand, Hallmark embarked on its journey in 1981 as an insurance company. However, it grappled with meeting the minimum paid-up capital requirement for an insurer set by the Insurance Ordinance 2000. The requirement escalated to a whopping Rs 30 crore - a sum that proved too hefty for Hallmark to muster, leading to the cessation of its insurance business in January 2003.

Undeterred by this setback, Hallmark pivoted towards the burgeoning information technology industry. With Pakistan’s advent into the digital age and the introduction of 4G services in 2014, Hallmark seized the opportunity to reinvent itself. It shifted its focus towards providing devices for data centers, end-user computing, and identity and security portfolio, complemented by pre and post-sale support services. This strategic pivot bore fruit from 2018 to 2021, after which its operations were scaled back.

In August 2021, acknowledging the inevitable, Hallmark began preparations for a potential buyout.