GGL set to launch IPO of subsidiary Ghani Chemicals Industries

Riding the wave of fresh public listings, Ghani Global Holdings Limited (GGL), a Lahore-based industrial and manufacturing group, announced on Monday that it will make an Initial Public Offering (IPO) of its subsidiary Ghani Chemicals Industries Limited (GCIL).

In its filing to the Pakistan Stock Exchange (PSX), GGL informed that the Board of Directors of GCIL, manufacturers of medical and industrial gases in Pakistan, has decided to launch an IPO at a strike price to be determined through the book-building process.

The company informed that the funds generated from the listing of its subsidiary would be utilised for setting up “two state-of-the-art chemical plants for the manufacturing of citric acid and sulphuric acid in Allama Iqbal Industrial City in Faislabad, with an approximate cost of Rs8.5 billion".

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GGL added that after ensuring financial structuring and the IPO, “GGL shall come to hold more than 50% equity in the listed GCIL with an expected valuation cap of GGL’s holding in GCIL coming approximately to about Rs13 billion, based on GCIL’s share price for the book-building process.”

As per GGL's annual report 2021, annual sales of Ghani Chemical Industries Limited (GCIL) for the year ended June 2021 closed at Rs4,350 million as compared to the previous year's sales of Rs2,330 million, an increase of 86.5%.

Gross profit jumped from Rs494 million to Rs1,657 million, an increase of 236%, due to an increase in sales volume as well as an increase in the average selling price of the products.

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Pakistan has been seeing a rising trend of listings on the PSX with 8 IPOs offered in FY2020-21 alone. This is in stark contrast to the previous fiscal year when no IPO was offered. In 2009-10, 8 IPOs were made before the number touched 7 in FY15.

Last month, the book-building of Pakistan's Octopus Digital resulted in a strike price of Rs40.6 -- the highest possible -- with the IPO being oversubscribed 27 times. The company received offers of over 745.6 million shares against its offer of 27.35 million at the initial price of Rs29 per share.

In August, the book-building of Pakistan's smartphone producer Air Link resulted in a strike price of Rs71.5 with the IPO being oversubscribed 1.64 times at the end of the two-day process.