Pakistan equity market saw only three IPOs in the outgoing calendar year 2012. This low level of listing is seen after a gap of 6 years while it also compares unfavourably with last 10-year. According to the report despite the fact that capital markets are potent tool to raise capital, the subdued trend of IPOs indicates reduced demand of fresh capital on account of slowdown in economic activity.
During the last 5 years, average GDP grew by 3 percent while investment to GDP slump down to 12.5 percent of GDP in FY12. Normally, listing planning takes time and we may see improvement in IPOs in 2013 as issuers may realise that booming market may be tapped to raise funds. During outgoing 2012, a total of Rs 500 million ($5 million) was offered to general public, HNWI (High-Net-Worth Individual) and local & foreign institutions, which is substantially lower than Rs 4.8 billion ($56 million) offered in 2011.
Out of Rs 500 million total amount offered in 2012, Rs 225 million ($2.4 million) was offered to general public whereas Rs 275 million ($3.6 million) were offered to HNWI and local/foreign institutions through private placement and book building. Of the three IPOs in 2012, one was related to financial service, ie, Next Capital, while TPL Direct was technology-related. Aisha Steel was from industrial concerns. Next Capital was undersubscribed, while the other two had a decent response from the public.