The number of equity investors in Pakistan declined in the last few years
As the stock market is not the reliable indicator of the strength of the economy, oversubscribed initial public offerings (IPOs) also do not reflect the growth and depth of the equity market.
Surprisingly, the total number of investors participating in the IPOs and accounted for Rs30 billion fund raising are less than 2,000. All know and agree that the number of equity investors hasn’t increased, instead it declined in the last few years.
A total of eight IPOs during FY21 raised Rs20 billion at the equity market. The total transactions included seven new listings: The Organic Meat Company, TPL Trakker Limited, Agha Steel Industries Limited, Panther Tyres Limited, Service Global Footwear Limited, Citi Pharma Limited and Pakistan Aluminum Beverage Cans Limited, and one preference share issuance (Engro Polymer and Chemicals Limited).
The Rs6.3 billion Air Link Communications IPO and Octopus Digital’s offering came in the first quarter of FY22.
This equity amount raised through IPOs during this period is also the highest-ever amount raised in Pakistan. Since a few hundred high-net worth individuals (elites that own multiple financial institutions) move the market, the impression the IPOs were over-priced needs to be looked into. Indeed, there have been several developments on the economic and geo-political fronts, amid the post-Covid recovery. However, several oversubscribed scrips plunged below the IPO...
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