Dalda Foods plans to raise as much as Rs4.6bn through IPO: report

Dalda Foods Limited, one of Pakistan’s leading edible oil companies, is planning an initial public offering (IPO) at the Pakistan Stock Exchange (PSX) to raise between Rs3.3 billion and Rs4.6 billion, reported Bloomberg.

“At Rs4.6 billion, Dalda’s IPO would be Pakistan’s largest by a consumer staple company,” data compiled by Bloomberg showed.

As per the report, the oil manufacturer intends to use the funds to expand its production capacity. The offering could take place before Ramazan, which is expected to start on March 22, according to Aziz Jindani, Dalda’s CEO.

“This particular IPO is intended to fund Port Qasim expansion,” Jindani was quoted as saying, referring to Dalda’s factory in Karachi.

The CEO added that the proceeds could expand its capacity in Karachi to extract oil from seeds. “It may reach 900 tons a day, more than doubling the current rate,” he said.

The offering could involve selling about 50 million shares, consisting of two-third new shares with the rest coming from existing shareholders, according to Shahid Ali Habib, chief executive officer at Arif Habib Ltd, and sole adviser to the IPO, the report said.

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The IPO comes at a time when the country faces a multitude of challenges on the economic front, including dwindling foreign exchange reserves, high inflation rate and an economic slowdown. However, despite the negative indicators, the demand for edible oil in Pakistan, home to over 220 million people, remains high.

“It’s recession-proof as a category,” Jindani said. The listing could help Dalda capture a larger share of Pakistan’s fragmented edible oil market.

The official said that the company’s revenues have grown 27% a year on average since 2018, and reached Rs88 billion in the fiscal year of 2022, more than those of other major food producers in the country such as dairy products company FrieslandCampina Engro Pakistan and National Foods.

The IPO would be the largest in the country since Air Link Communication Limited’s Rs6.4-billion listing. The company is one of the largest distributor of mobile phones in Pakistan.