Plans to raise Rs1.1b from the issue oversubscribed 27.3 times
Octopus Digital Initial Public Offer (IPO) received the highest number of bids in the history of the Pakistan Stock Exchange during the book-building process of the technology stock. The stock’s strike price has been set at its ceiling – Rs40.6 a share.
The tech firm was initially looking to raise a minimum Rs793million by offering 27.4 million shares at a minimum price of Rs29 per share in the IPO. But it will now raise Rs1.1 billion from the IPO after securing the highest maximum price for its stock.
Book-building was oversubscribed 27.3 times, resulting in successful bidders receiving only 2.75% of the shares they had originally bid. It means that if a person had bid for 25,000 shares, he or she will receive only 668 shares.
“The IPO received a great response,” said senior research analyst Adnan Sami Sheikh. “It was two times (over)subscribed in the first 30 minutes,” he said.
He added that this is highest response a company had ever received in the PSX’s history.
Sheikh, who is the AVP of research at Pak Kuwait Investments, said that Octopus would reap huge synergies given their longstanding history in the sector.
Octopus Digital is a wholly-owned subsidiary of Avanceon Ltd. The company plans to develop 29 independent intellectual properties under different categories from which the company will be providing two main offerings – Topware and Omni Connect.
“Avanceon has been providing industrial automation solutions for over 30 years. So, they have 30 years of experience in the market and 30 years of client rights,” said Sheikh.
The book-building was held on September 9 and 10. The price was 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 16 and 17 at a price of Rs40.6.
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 10 million shares at Rs40, for another 10 million shares, there are bids at Rs35 and bids for remaining 7.4 million shares is at Rs30, then the strike price will be Rs30. All of the top bidders will also receive the shares at Rs30. 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 27.4 million shares in this case, and the remaining shares will be offered to retail investors at the strike price later.
The company requires funding to develop Digital Dashboard platforms to upgrade its services suite to industry 4.0, which is an industrial revolution that includes automation of traditional manufacturing and industrial practices. The industry 4.0 refers to a new phase in the industrial revolution that focuses heavily on interconnectivity, automation, machine learning and real-time data. The target markets for these services will be Pakistan, Middle East and the United States.
General investors can apply to buy shares on September 16 and 17 through United Bank Limited, Meezan Bank Limited, Faysal Bank Limited, Soneri Bank Limited, Allied Bank Limited, MCB Bank Limited and Habib Metropolitan Bank.
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.