Pakistan: Amreli Steels IPO

amreli steelsAmreli Steels is all set to raise at least Rs1.78 billion through its upcoming Initial Public Offer (IPO). The steel-bar manufacturer will issue a total of 74.2 million shares, with a face value of Rs10 each, at a floor price of Rs24 per share. Amreli Steels’ IPO follows that of Mughal Iron and Steel Industries that was listed earlier this year.

Amreli Steels is the first IPO after new book building regulations issued by Securities & Exchange Commission of Pakistan (SECP) earlier this fiscal year. The new book building regulations are aimed at curbing speculative or manipulative attempts during the auction through various measures.

In the first phase of the IPO to be held on October 7-8, Amreli Steels will sell 55.5 million shares to institutional and high net-worth individual clients. The second phase of the IPO, consisting of the sale of 18.7 million shares to the general public, will take place on October 27-29.

The recent promising outlook of the country’s construction sector, along with the announcement of China Pakistan Economic Corridor (CPEC), has motivated the company to raise public equity to expand its manufacturing facilities.

With improving security outlook of the country, construction and other infrastructure related companies in Pakistan are expecting better economic activities in coming years, and Amreeli Steels is no different.

However, the Company is not completely relying on its upcoming IPO to expand business and has already requested a syndicated loan of Rs1.5 billion from UBL and Askari Bank.

Expansion of its manufacturing facility will be complete by December 2016, raising production capacity to 480,000 tons/year, from current production capacity of 180,000 tons/year.

Recently, China signed $28 billion deals with Pakistan as part of a planned $45 billion economic corridor. The deals are related to the construction of power plants and dams. This is likely to spur demand for superior quality steel for the corridor project.

 

CPEC, Amreli Steels, IPO from Pakistan

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