KARACHI: Pakistan market (PSX) saw just one IPO in 2023, with a meagre Rs 435 million of funds raised.

This was the lowest amount raised in a year in the past decade and half of the previous record low of Rs 800 million seen in 2013.

In terms of number of IPOs, PSX has yet again seen a single IPO after 2019. This is in sharp contrast to the previous 5 year and 10 year average of 4 IPO’s/year.

“We attribute this bad IPO trend to macro-economic instability, coupled with the looming threat of default, cheap valuations and political uncertainty discouraging equity investment,” Muhammad Sohail, CEO of Topline Securities said.

The single IPO that the PSX saw this year was of Symmetry Group (SYM) on the main board.

This is Pakistan’s first publicly listed digital technology company with focus on digitalization of consumer-centric functions of organizations.

The company offered 101.24 million shares at strike price of Rs 4.3/share, raising Rs 435 million in August 2023 with an over-subscription of 1.58x.

Globally, a similar trend has also been seen where IPOs have dried-up.

As per Ernst & Young (E&Y), a total of 968 IPOs were witnessed till the first nine months of 2023 raising $101 billion compared to 1,018 IPOs raising $148 billion in same period last year.

This is attributed to rising macro challenges, tighter liquidity, and higher cost of capital.

The benchmark KSE-100 index in the first half of 2023 was up by only 3.0 percent in PKR while down 19 percent in US$ with average daily traded volume of 163 million shares and average daily traded value of Rs 6.0 billion.

However in the second half of 2023 to date, the KSE-100 index witnessed sharp recovery and is up by 51 percent in PKR and 52 percent in US$ with average daily traded volume in cash/ready market improved to 377 million shares and Rs 12 billion.

We believe, this positive sentiment if maintained, is likely to be capitalized by companies wishing to access external capital; which will lead to an uptick in companies applying to be listed at the PSX in 2024.

A new shorter IPO process has recently been introduced in Pakistan, where 14 working day limit has been placed for granting of regulatory approval to listing application and prospectus by SECP, coupled with a 15 day limit on PSX for post-approval procedure for listing.

“We believe this standardization will also help in more companies raising funds through IPO in 2024.”

Copyright Business Recorder, 2023