Air Link Communication Limited will utilise funds from a planned Initial Public Offering (IPO) to expand its distribution network, said Chief Executive Officer Muzzaffar Hayat Piracha, as the company looks to take advantage of the government’s ‘Made in Pakistan’ policies as well as tap eager stock market investors.
The mobile distributor and assembler recently revealed its plan to raise Rs5.85 billion through an IPO this month, which would be Pakistan’s largest in the private sector. The company is offering 90 million shares at a minimum price of Rs65/share in order to raise the amount, which Piracha said would be used to meet working capital requirements and expand the distribution network.
“The proceeds of the IPO are intended to be used to enhance Air Link’s working capital and widen the company’s distribution network,” Piracha told Business Recorder.
Currently, the company has a network of over 4,000 retailers and 1,000 wholesalers in over 300 cities, and also runs 14 retail outlets in five cities.
Between 2012-21, sales of Air Link have increased from Rs140 million to over Rs47 billion, said the CEO. “The company expects that post-IPO it will be able to grow the topline by a minimum of 50% in the next financial year.”
The IPO comes as authorities not only push to adopt a ‘Made in Pakistan’ approach, offering incentives and tax-breaks to bolster manufacturing, but also as the country’s stock market continues its upward trajectory since the pandemic-induced fall last year.
Piracha said the country’s demographics and consumer trends are also supportive.
“In addition to the government’s focus on ‘Made-in-Pakistan’, the country’s demographics and consumer trends also seem supportive.
“Moreover, the ecommerce boom will inevitably be a positive.”
A younger population has already made Pakistan an attractive market for mobile phone penetration, Piracha believes, with the country being an “untapped gold mine” when it comes to ecommerce.
“One cannot simply deny that Pakistan is an untapped gold mine when it comes to ecommerce, further pushing demand of smart mobile phone in the future.
“Conversion from feature phones to smart phones for the large population of Pakistan is now inevitable.”
Piracha added that the company plans to gradually double its existing production capacity, hailing the entry of Samsung in Pakistan as well.
PTA issues MDM approval to Lucky Motor Corp for Samsung phones
Just recently, the Pakistan Telecommunication Authority (PTA) issued Mobile Device Manufacturing (MDM) authorisation to Lucky Motor Corporation Limited to manufacture Samsung-branded phones in the country.
Meanwhile, Air Link in March also inaugurated a smart phone production facility with a production capacity of 6 million units per annum.
IPO push
The upcoming IPO will be Pakistan’s largest from a non-state company. Back in 2019, textile giant Interloop Limited successfully raised Rs5.025 billion through the then- largest private-sector IPO.
Air Link’s IPO comes as Pakistan saw a record streak of listings on the PSX with 8 IPOs offered in FY2020-21 alone, a significant jump from the figure of zero IPOs recorded in the previous fiscal year.
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 was marred with an economic slowdown and political uncertainty.