Record IPO Wave to Swell Significantly, Pakistan Bourse CEO Says

(Bloomberg) -- Pakistan’s record run of initial public offerings is expected to gather pace in coming months as more companies rush to raise funds amid the economic recovery, according to the head of the nation’s stock market.

Seven companies raised an unprecedented 17 billion rupees ($100 million) in the financial year ended June, according to data compiled by Bloomberg. The total for the current year will be “significantly higher,” said Farrukh Khan, chief executive officer at the Pakistan Stock Exchange Ltd., while declining to offer projections. 

“There’s a full pipeline” of companies planning to list, Khan said in an interview this month. “IPOs happen because people need capital, so you need good things happening at the exchange level; that the exchange is functioning well, there’s ample liquidity, investors are available and the valuations are good.”

Khan pointed to the success of Air Link Communication Ltd. -- which started trading last week following the country’s largest private sector IPO -- and Octopus Digital’s offer that was oversubscribed within 30 minutes of opening its book building, as evidence that current weakness in the markets won’t deter potential applicants. 

While Pakistan’s benchmark stock index has rebounded about 70% from its pandemic lows in March 2020, it’s up just 1.6% this year, underperforming most of its global peers. Pakistan’s KSE-100 Index dropped 1.5% as of 2:47 p.m. local time Monday.

Companies need money to invest as Prime Minister Imran Khan’s government targets the highest economic growth in four years, PSX’s Khan said. Drugmaker Searle Co. and internet services company Telecard Ltd. are among firms planning to list subsidiaries.

The Pakistan Stock Exchange, which is 40% owned by a consortium of Chinese bourses, is embedding a new trading platform acquired from its partner Shenzen Stock Exchange Co. that will allow new products to be launched in about two months.

The stock exchange is also working on a plan that will enable trading in sovereign bonds by the end of the year, said Khan, adding that index trading, derivatives or options trading will be launched between January-June after consultation with market players.

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