ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Pakistan's Stock Exchange persuades top 100 private companies to seek listing
Publication Date : 14-10-2013
The Karachi Stock Exchange is gearing up to bring as many of the country’s big corporates under its fold as possible.
“A list of 100 biggest private companies, by capital and assets, has been prepared and passed on by the chief regulator to the KSE,” says an official of the exchange.
He said that the selected companies had been contacted and were being persuaded to mobilise funds from the capital market.
“A confidence building process is underway, so that the fear of over regulation, unnecessary probe into company affairs and perceived harassment by the taxmen are dissipated,” he added.
And the KSE is excited over the proposed KESC ‘sukuk’the Islamic bond. The 2 billion Pakistani rupees worth KESC sukuk with green-shoe option would be the first
Islamic debt instrument of its kind to be listed on the stock exchanges. There are 70 to 80 sukuk Islamic bonds, but all in the private sector. KESC has formed the Advisory Board, sought the ratings and made presentations at the exchange.
“Once the KESC sukuk is on the ready board, it would unleash wave of new Islamic instruments, for which the appetite is insatiable,” says the official.
The relentless bull run at the country’s stock market that began in January of 2012 has slowed down over the last couple of months with the KSE-100 index providing negative return of around 3 per cent since the start of the current financial year. But early entrants have made phenomenal gains of over 80 per cent.
Putting aside the ‘buy’ notes of many investment analysts on most companies, it is evident to the discerning investor that most active stocks have reached or even scaled their ‘fair’ prices.
“The honeymoon with the market seems to be over,” says a veteran broker, who has seen several ups and downs. The focus therefore appears to shift to new listings which have been far too few: Just one new listing in 2013 to-date.
The second initial public offering (IPO) of Engro Fertilisers, a major subsidiary of listed Engro Corp, is likely to hit the market in short time. The transaction would be 100 million shares, to be sold at a minimum price of 20 Pakistani rupees.
“The timing of this offer cannot have been better as both the Engro Fertiliser plants have been operating at 80 to 85 per cent capacity since mid-July 2013.
However the local bourse is under a consolidation phase with benchmark index down 6 per cent in last two months as interest rates are rising and the rupee remains under pressure.
So it will be interesting to see the investor participation in this offer and how much over the floor price of 20 Pakistani rupees they can bid,” says analyst Asad I. Siddiqui.
Yet, the official at the stock exchange points out that there are several new offerings in the pipeline. The ‘daily quotation’ of the KSE mentions the following as having applied for listings: Pakistan International Bulk Terminal Limited; Hascol Petroleum Limited, DYL Motor Cycles Limited and Faysal Financial Sector Opportunity Fund.
Besides that of Engro Fertilizers, prospectus of ‘Avanceon Limited’ has been cleared by the exchange.
The KSE pins hopes on the government to keep the promise of privatisation of 31 State-Owned Enterprises (SOEs) within the next 12 to 18 months with its announced preference to offload OGDC in the international market and PPL in both local and international markets.
“It should trigger interest of entrepreneurs in mobilising funds from the stock market,” says the KSE official.
He stressed that privatisation had proved to be trigger for new listings in many markets of the world including China.
US$1=106.1 Pakistani rupees