Company expects to raise at least Rs5.8b
Airlink Communication Ltd, a cell phone distributor in Pakistan, is set for the largest ever Initial Public Offering of Pakistan’s private sector. The company has ventured into manufacturing recently – assembling TCL, ITel and Tecno cell phones in the country.
The company will be selling 90 million shares at a base price of Rs65 per share, which will amount to Rs5.85 billion in total at base price.
The book building will be held on August 30 and 31 and the price will be 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.
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 50 million shares at Rs90, for another 30 million shares, there are bids at Rs87 and bids for remaining 10 million shares is at Rs85, then the strike price will be Rs85. All of the top bidders will receive the shares at Rs85. 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, which is 90 million shares in this case, and the remaining shares will be offered to retail investors at the strike price later.
Airlink will raise at least Rs5.85 billion in the IPO at a base price of Rs65. But based on the interest from investors during the book-building process, the strike price can rise by 40% (Rs91 a share), thus helping the company collect Rs8.2 billion.
According to Alfalah CLSA Research and BMA Capital Research, the stock can be subscribed at its ceiling price of Rs91. Meanwhile, AKD Research has told investors not to buy the share above Rs80.
Airlink has started manufacturing TCL, ITel and Tecno cell phones in Pakistan. 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.
Airlink started its distribution of smart phones in 2012 and currently is a distributor of Samsung, Huawei, Xiaomi and Apple. Airlink’s revenue grew from Rs140 million in 2012 to Rs47.3 billion by the end of June 2021.
Airlink 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.
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.