PABC gears up as Pakistan’s eighth IPO this fiscal year, highest since 2009-10

(Karachi) High liquidity and better valuations have played a key role in driving the country’s initial public offering (IPO) market, said Arif Habib Limited Chief Executive Officer Shahid Habib, as Pakistan sees its eighth IPO during the current fiscal year, its highest since fiscal year 2009-10.

Ashmore Mauritius PABC Limited will offer 93.9 million shares, 26% of paid-up capital, in Pakistan Aluminium Beverage Cans (PABC) Ltd before the end of this fiscal year, hoping to raise at least Rs3.29 billion from the country’s capital market.

An indicative price range of Rs35 to Rs49 per share has been shared by AHL, which also conveyed that a separate private placement of 18.1 million shares (5%) at Rs30.8 has occurred in addition to 72.2 million shares (20%) at Rs31.85 going to another investor called Soorty Enterprises, a Karachi-based textile company.

Ashmore Investment to sell its stake in Pakistan’s can maker

“Sponsor lock-in period for 1 year will apply on both the Private Placement investors,” said the brokerage house.

Meanwhile, the book-building process, set to take place on June 22 and June 23 with the general public portion on June 29 and 30, will complete Pakistan’s eighth IPO during the current fiscal year, a stark contrast to 2019-2020 when no offering was made.

In 2009-10, 8 IPOs were made before the number touched 7 in FY15. However, 7 IPOs were conducted in three years combined, from FY18 to FY20, as Pakistan’s stock market remained under pressure due to slowing economic growth and political uncertainty.

This year’s growth comes in tandem with momentum at the KSE-100 Index, widely seen as a benchmark for market performance, which has registered close to a 40% increase during the fiscal year.

“High liquidity and better valuations have played a key role in driving the IPO market,” Habib told Business Recorder. “There is renewed confidence in industries to continue to invest and expand. The government has also played its part in encouraging local manufacturing.”

PABC’s IPO

PABC, a joint venture of the U.K.’s Ashmore Group and Pakistan’s Liberty Group Ltd, counts Coca-Cola Co. as one of its major customers. Earlier this week, Coca Cola İçecek (CCI) Pakistan announced that it will invest $50 million as it sets up its seventh production plant in the country in Haripur District, Khyber-Pakhtunkhwa (K-P).

Coca Cola Pakistan announces $50m investment for K-P plant

PABC is planning to raise money at a time when the consumption of beverage is projected to grow at a five-year compound annual growth rate (CAGR) of 7%, from 3.9 billion litres to 5.3 billion by 2023, as per Euromonitor International.

Can penetration may potentially increase in Pakistan from the current 3.6% to 5-6% by 2025, which would increase sales in the country to 650 million cans, a CAGR of 19%, added AHL.

“Pakistan has one of the lowest soft drinks consumption per capita amongst similar markets – however this low base is helping the industry grow at a much faster pace when compared to the rest of the world,” said the investment bank.

With exports accounting for a major portion of PABC’s sales – Afghanistan being its biggest market – the company is also looking to expand capacity to as many as 1 billion cans a year, Bloomberg quoted the CEO as saying in April.

“PABC is working with two large global brands to double the penetration in the beverage can business for single serve as this is the most qualitative packaging in terms of quality of beverage,” PABC CEO Azam Sakrani told Business Recorder on Friday.