Pakistan’s Largest IPO In a Decade: Agha Steel Industries Ltd. to Go Public

Agha Steel Industries Ltd. is planning to go public, in Pakistan’s biggest-ever private sector IPO. The company is expanding as to increase output, since the ‘One belt, One road’ initiatives continue to require infrastructure development. Pakistani economy continues to upsurge as China is funding more than $55 billion in infrastructure projects across the country.

Karachi based Agha Steel is planning to raise as much as 10 billion rupees ($95 million) selling a 25 percent stake. This is going to be the biggest sale since 2007, when government stake in Habib Bank Ltd. was sold at 12 billion rupees.

One Belt, One Road – More Steel, More Cement

Also Read: Chinese Companies Eager to Invest in Pakistan Under CPEC

Steel and cement makers have been expanding their products as demands increase due to the ‘One belt, One road’ Chinese project. The region has seen increased economic activity in infrastructure segment. Other steel manufacturers within Pakistan have also been expanding their production range. International Steels Ltd. and Aisha Steel Mills – have also increased their production to meet increased demand.

Pakistan’s steel output grew 23% to 3.6 million tons in 2016, biggest gain among 40 nations, source World Steel Association. Agha Steels estimate as much as 12% annual increase in demand over the next three years.

“You need roads, sky rises and housing,” said Agha.

He added:

“Pakistan’s steel industry is in an infancy stage and growing at a massive pace — the whole environment will change.”

Also Read: China Champions for Global Leadership: Promises to Invest $124 Billion for New Silk Road

As per the data provided by State Bank of Pakistan’s annual report, doubling over the pace of the previous year, the construction sector has observed a 13% growth in 2016. Urbanisation and increased income levels have left the nation with an annual shortfall of 500,000 homes, says Arif Habib.

Commenting at the development Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd. said:

“Real-estate is the main engine for this growth, it has really picked up. The government is also willing to protect companies with anti-dumping measures.”

With the intention to protect domestic producers, Pakistan had imposed a five years anti-dumping duty on Chinese imports of galvanised coils and sheets in February.

Also Read: Pakistan Imposes Anti-Dumping Duty on Chinese Steel Products

Agha Steels Ltd. IPO Plan

The company will be using the funds for $50 million expansion project in its production plants. This is going to help triple output to 500,000 metric tons within two years. The production will then double to a million tons by 2023, initial estimates suggest. Habib Bank has been appointed financial adviser while Arif Habib Ltd. and BMA Capital Ltd. have been picked as book runners for transaction.

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