KARACHI: The book-building phase of the Initial Public Offering (IPO) of Agha Steel concluded on Wednesday with investors oversubscribing it by as much as 1.63 times.
The IPO received an overwhelming response from institutional investors and high net worth individuals as the strike price clocked in at Rs 32 per share, higher than the floor price of Rs 30.
This means Agha Steel is going to raise Rs 3.8 billion in total, making it the largest IPO in the steel sector and the second-largest IPO in the private sector.
Brokers and investment advisory firms had issued almost unanimous calls to ‘subscribe,’ which resulted in investor demand amounting to Rs 4.4 billion against the IPO’s book-building size of Rs 2.7 billion.
The general public will subscribe to the remaining 30 million shares (25 percent of the total offer size) on Oct 14-15, 2020 at the strike price of Rs 32.
The company will use IPO proceeds to finance the expansion of its re-rolling capacity from 250,000 metric tons to 650,000 MT. It will increase the reinforcing bar production capacity by 160 per cent.
Brokerage houses anticipate steady growth in the company’s bottom line owing to a substantial rise in construction activities across the country. The main product of Agha Steel is reinforcing bars that are used in the construction of mega structures, roads, bridges, skyscrapers and homes.
In a research report last week, AL Habib Capital Markets stated that it expected the share price of Agha Steel to hover around Rs 57 by June 2022.
The target prices stated by Pearl Securities and KASB Securities are Rs 50 and Rs 42, respectively.
In a message on social media, Agha Steel CEO Hussain Iqbal Agha expressed his gratitude to investors and their historic overwhelming response. He vowed to ensure growth of their shareholders’ equity.
Copyright Business Recorder, 2020
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