Capital market: Investors show confidence as all IPOs oversubscribed

ISLAMABAD: Pakistani capital market has witnessed 10 Initial Public Offerings (IPOs), eight equity and two debt issues during 2020-21, reflecting impressive performance of the IPOs.

According to the SECP’s latest report, all these IPOs were oversubscribed, showing investors’ confidence in the capital market. The surge in IPOs can be directly attributed to various reforms introduced by SECP in the recent past, including amendments in Public Offering Regulations, 2017, Structuring of Debt Securities Regulations, 2020 and in PSX Regulations, whereby the process of public offering has been streamlined.

The IPO activity has shown tremendous improvement after a long spell. Highest number of companies have been listed compared to last 5 years, whereas funds raised is the highest during a decade. During the FY 2020-21, eight (08) companies raised Rs20.2 billion as compared to no listings during the FY 2019-20. Out of these eight companies, seven are newly listed companies, whereas one already listed company namely Engro Polymer & Chemical Limited, offered its preference shares to the general public. All the issues were oversubscribed, while Pakistan Aluminium Beverage Cans Ltd was the largest, raising an amount of Rs4.60 billion.

Primary capital markets offer immense potential for business growth and development by providing opportunities to raise capital, both in form of equity and debt, at competitive prices. In the Asian market, Initial Public Offerings (IPOs) have increased due to the substantial growth opportunities. Since Pakistan is an emerging economy, huge potential exists for companies to go public. In keeping with its role of capital market regulator, SECP is striving to implement reforms that encourage companies to enlist on the stock market, SECP report maintained.

Copyright Business Recorder, 2022