KARACHI: Matco Foods’ share trade began on Tuesday after the country’s largest Basmati rice exporter raised over Rs750 million through the year’s first initial public offering (IPO).
Director Finance Faizan Ghori at Matco Foods, addressing a news conference, said the company raised Rs757 million as the public offer was successfully subscribed.
“The capital so raised is being invested a profitable and high-margin business and at least 40 percent of the company’s profits will be shared with the shareholders this year,” Ghori added.
Matco completed the book building and public portion of the IPO in the end of January with a total issue of 29.1 million ordinary shares at a strike price of Rs26/share.
With the trade starting in the shares of newly-listed Matco Foods, the scrip hit the upper price limit surging five percent on growing interest from investors.
Jawed Ghori, chairman of Matco Foods Limited ringed the gong at the start of trading along with Richard Morin, chief executive officer of PSX and Hang You, deputy managing director of PSX.
Matco is the only International Finance Corporation’s (IFC) investee company in the agro-processing sector of Pakistan since 2012. World Bank’s investment wing IFC held 15 percent stake in Matco Foods after the IPO.
Director Ghori of Matco said the company is expanding its product base and soon convenience foods will be brought to the market.
Matco Foods Limited intends to use the net proceeds from the public offering to expand production capacity of glucose plant to 30,000 metric tons from 10,000 metric tons and protein output capacity to 3,000 metric tons from 1,000 metric tons.
Khalid Ghori, chief executive officer of Matco Foods said it was the first IPO of 2018 and hoped that more rice processing companies would opt for listing and expand the market base.
“Stock market is playing its core role i.e. raising capital as companies are switching towards equity capital from debt capital,” Ghori added.
Last year, three companies raised Rs8.6 billion by offering their shares to public on the bull-run driven by Morgan Stanley Capital International (MSCI) upgrade.
The equity market also witnessed three initial public offerings in 2016, but they raised only Rs4.2 billion.
In 2017, PSX raised Rs4.49 billion in primary offerings through floating 160.3 million shares at a floor price of 28/share. Its strike price remained the same. The issue was 20 percent of the PSX’s stake. Earlier, its 40 percent strategic stake was sold to a consortium of Chinese investors.
The second largest IPO was of Roshan Packages Limited, a packaging company, with Rs2.8 billion against 32.5 million shares for 35/share. The issue was oversubscribed 6.8 times and struck at a whopping Rs86.25/share, 2.5 times higher than the floor.
Steel maker Ittefaq Iron Industries raised Rs1.26 billion with 41.75 million shares at floor price of Rs12/share. The issue was oversubscribed by 2.5 times, while the striking price rose 2.5 times to Rs30.2/share.
Analyst Adnan Sami at Topline Securities said four IPOs are scheduled during the current year. Their names include towel maker Hira Terry Mill, TPL Life Insurance, Ethanol producer Unicol Limited and electricity producer Liberty Power Tech.
Since the MSCI semiannual review back in November last year, Pakistan’s equity market climbed more than 11 percent.