Going public is the theme now at the local bourse, with Avanceon Limited being the latest entrant. Avanceon is the leading automation and process control provider in Pakistan, having a proud clientele of almost all blue chip manufacturing concerns in the country. What was a one-man business 24 years ago has now grown into a sizeable firm with operations spread across the border in the Middle East and USA. The shares on offer through book building were expectedly over-subscribed, as Rs14/share was widely considered a justified premium over par value, given the strong fundamentals and the exciting growth prospects. The strike price was not determined when the article was penned down, but company officials believe it to close to the offer price. The purpose for the offering is believed to be the company’s expanding footprints in the UAE, where it plans to establish a permanent station, with full time employees, to cater for the outstanding opportunities on offer. Although there is more than what meets the eye, as the company CEO, Bakhtiar Wain told BR Research in a soon-to-be-published interview that employee stock option scheme was also a major driver behind going public, which should offer better value to the shareholders. Avanceon boasts of very clean accounts, termed as the “cleanest” in the local corporate market by the CEO himself. At present, foreign business accounts for 60 percent of Avanceon’s revenue stream, giving it a major cost advantage, as the engineering and automation is done locally, while foreign clients are billed in their respective currencies. Avanceon expects to double the international business over next five years, as it enjoys good repute and opportunities are limitless. More interestingly, the company also expects the local market to continue growing rapidly, especially expecting business from energy and food and beverages sectors. While, the offer price may seem too low on earnings multiples, the CEO explained, the purpose is to get listed and become a familiar name, instead of fetching more money. Moreover, Avanceon’s is a zero debt balance sheet and the company is confident to run on completely equity-based financing for as long as it wishes. Strong cash flows enables the company to finance its working capital requirements internally, evident by nearly Rs350 million cash, on which Avanceon currently sits on. For those worrying how the employee stock option scheme may hamper the profitability going forward, the CEO told BR Research that this has already been expensed in the last quarter’s accounts. Avanceon’s most precious asset is its human resource, and it is available in abundance and quality locally, which helps Avanceon keep up with demands of meeting more business coming its way. From what it appears one can expect the IPO to attract subscription in good numbers. It will be interesting to see how a newbie, confident of good returns from local business, performs in the stock market when its shares hit the float.