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Air Link to raise Rs6.43b in biggest private sector IPO

Stock price set at Rs71.5 for 90m shares

SAMAA | - Posted: Aug 31, 2021 | Last Updated: 2 months ago
SAMAA |
Posted: Aug 31, 2021 | Last Updated: 2 months ago

Air Link Communication Ltd, a cell phone distributor in Pakistan, is all set to raise Rs6.43 billion as the two-day book-building of its Initial Public Offer (IPO) ended.

The company had put its 90 million shares up for sale at a floor price of Rs65. The initial share price was decided at Rs71.5. This is called strike price.        The IPO was oversubscribed by 1.64 times – the company received a demand for 147.7 million shares against its 90 million offered. The top bidders will be entertained.

Air Link has been one of the top distributors of mobile phones in the country distributing iPhone, Huawei, Samsung and Xiaomi phones. Air Link has ventured into manufacturing recently – assembling TCL, ITel and Tecno cell phones in the country.

The book building was held on August 30 and 31 and the price has been decided with institutions and high net worth individuals bidding via the Dutch auction method. The general public will be able to buy the company’s shares on September 6 and 7. JS Global Capital Limited is the consultant and book runner to this issue.

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What is the Dutch auction method?

In the Dutch auction method, coming down from the highest price in the bidding process, and the price where the total number of shares are completely sold become the strike price.

For instance, if there are bids of 30 million shares at Rs90, for another 30 million shares, there are bids at Rs80 and bids for remaining 10 million shares is at Rs71.5, then the strike price will be Rs71.5. All of the top bidders will receive the shares at Rs71.5. The stock will also be offered to the general public at this price as well.  

Successful bidders will be provisionally allotted only 75% of the issue size of 90 million shares in this case, and the remaining shares will be offered to retail investors at the strike price later.

What is Air Link making?

Airlink has started manufacturing TCL, ITel and Tecno cell phones in Pakistan. According to reports, it has also started to export cell phones. The company has an annual capacity of manufacturing 4.8 million mobile phones at its plant in Lahore. The company is expected to reach full capacity by December this year.  

The company is one of the largest distributors of mobile phones in Pakistan with a nationwide network linked with over 1,000 wholesalers and 4,000 retailers.

Air Link started its distribution of smart phones in 2012. Air Link’s revenue grew from Rs140 million in 2012 to Rs47.3 billion by the end of June 2021.

Air Link has now started assembling smart phones in Pakistan and has already opened 14 retail stores, including in high-end malls such as Dolmen and LuckyOne in Karachi and Packages, Emporium and Xinhua malls in Lahore.

The company says the government’s initiative to promote assembling and consequential exports from Pakistan through the new Mobile Device Manufacturing Policy was the reason for it entering the manufacturing business.

The duty and taxes of about 20% to 25%, which was on a complete set of smart phones, has been brought almost to zero if companies import semi-knocked down units (components) and assemble them in Pakistan, according to the company.

How to buy Air Link shares?

General investors can apply to buy shares on September 6 and 7 through United Bank Limited, JS Bank, Bank Alfalah, Dubai Islamic Bank, MCB Bank Limited, Habib Bank Limited, Faysal Bank, Bank Al Habib, Meezan Bank, Soneri Bank, Habib Metropolitan Bank and Allied Bank Limited.

They can also buy stocks by submitting electronic and physical applications. Online applications can be submitted through PSX’s e-IPO system and the Centralized E-IPO system of the Central Depository Company of Pakistan Limited. PES and CES can be accessed via the web link https://eipo.psx.com.pk, www.cdceipo.com.

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