By
Mr. Shahid Ali Habib
Chief Executive Officer
Brief Profile
 Leading Securities brokerage & Financial Services Firm
 Brokerage Operation since 1970
 One of few listed securities brokerage houses
 Market Capitalization of 1.7 bn ( $ 17 mn)
 Parent Company Market Capitalization of 11 bn ( $ 110 mn)
 7 out of 13 equity issues over the last 3 years
 Around 7% market share in KSE traded volume
 Top 25 companies award for 2008 and 2009, none ever got
 CFA award for Corporate Finance and Equity Traders
2
Overview of IPO Market
 IPO activity globally
 2012
768 companies
$ 118.5 bn
 2011
1,225 companies
$ 170 bn
 Local IPO activity - continuous decline over last 4 years
 2012
3 companies
500 mn
 2011
4 companies
4,479 mn
 2010
8
6 companies
6,348 mn
No. Of IPOs
6,348
6
4
8,000
Amount (PKR mn)
6,000
4,479
6
4
2
4,000
2,000
3
500
0
2010
2011
2012
00
2013
PKR mn
3
Promoting IPO Market
 Promotion and development of IPO market are dependent on
following
 Secondary Market Valuations
 Regulators
 Government
 Issuers
 Advisors
 Automation
 Investors
4
Secondary Market Valuation
 Higher market valuation invites IPOs
 Higher liquidity
 Lower debt yields or other instruments
 Existence of varied Investor Classes (Foreigners, Pension & Provident
funds, Banks, Mutual Funds)
 Individual investors to follow big institutions
5
Regulator’s Role
 Amendments in Capital Issue Rules are required
 One positive year of operation for asking premium should be removed
 one uniform criterion for loan-based projects and equity-based projects
 Requirement of project appraisal from financial institution should be removed
 Stock exchange verification of installation of P&E is not required
 This will reduce the cost of raising equity currently 5%-6%
 MNCs delisting should be eye opener for Regulators
 Regulators should give relaxation/remove few condition like:
 Minimum Application size;
 To collect 500 applications of 500 shares;
 increase the percentage of book building portion – currently 75%
 Delisting reasons should be addressed
6
Government
 Providing fiscal benefits - Income Tax differential between Public and
Private Companies
 Dividend withholding tax rate differential between listed & unlisted
 Disinvestment of some stake of government entities like in the past

OGDC,

PPL

HBL

Help discovering price for future privatization
7
Advisor’s Role
 Need to have proper intelligence and research team to look for prospective
issuers
 Shariah compliant issuers should be marketed
 Due diligence of an Issuer is a must!
 Should do proper in-depth analysis and valuation of the issuer’s business
before bringing the Issue to Public;
 Proper firewalls between CF and brokerage to maintain confidentiality
 Ensure all material information is provided to investors/regulators for their
own/independent assessment
 Advisory quality should be of utmost importance
 Experienced team to provide first-rate advisory services
 Extensive Road Shows to prospective Investors
 Country wide road shows to general public for wider participation
8
Issuer’s Role
 Issuers should be encouraged for listing for expansion – key role for
advisors
 Quality issues can easily attract wider interest and will multiply
capitalizations
 Even in a challenging economies, companies prepared early for their
IPO journey are best able to leverage the windows of IPO opportunity
when market recovers;
 Disseminate appropriate and complete information to regulators,
advisors and investors;
 Discuss its future plans with regulators, advisors and investors;
 Conduct Road shows, presentations and awareness media campaigns;
 Ensure transparent utilization of IPO proceeds;
 Keep its investors well informed by company’s strategy even after IPO
9
Automation (User Friendly)
 Can increase general public investment in IPO by introducing
electronic/online subscription methods – some initiatives have been taken
recently in the IPO of Aisha Steel Mills Limited;
 Banks Collaboration is necessary for wider participation
 Automatic opening of CDC account
 Using ATM, Online and Mobile Banking
 Easy mode to attract non resident funds
 Awareness campaigns through print & electronic media
 Investor friendly process of application filing
10
Investor’s Role
 Assess the IPO opportunity meticulously including, but not limited to:
 Sector analysis
 Economic analysis
 Company analysis
 Sponsors’ profile
 Comparative analysis, etc
 Attend investor presentations
 Carefully review/analyze the Prospectus/OFSD
 Follow the regulatory procedures
 Fundamentally strong scrip is a better investment opportunity than
the speculative one!
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Thank You
12
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Mr. Shahid Ali Habib