LISTING OF NEW COMPANIES AT KSE

The time has come when the international investors have to look towards Pakistan seriously

By AMANULLAH BASHAR
Oct 13 - 19, 2003

The Karachi Stock Exchange (KSE) has granted clearance to the offer for sale documents of the forthcoming Initial Public Offering (IPO) of the Oil and Gas Development Company Limited (OGDCL).

Moin Fudda, Managing Director KSE has expressed the hope that the OGDCL would be the largest public offering after PTCL. It would significantly add to the existing depth of the capital markets of the country and also add a new dimension to investors' interest in the market activity.

The new listing would offer 107,523 million shares i.e. 2.5 percent of face value of Rs10 each at a premium of Rs22 per share that means that the offer would be Rs32 per share. This would be a substantial addition to the existing market capitalization base of the Karachi Stock Exchange that is likely to exceed Rs one trillion mark.

Despite the fact that the share market has been passing through a bumpy road marked by sharp ups and downs for quite sometimes, Ahmed Baloch, Chief Executive of White House Securities was of the opinion that the coming events of listing state-owned entities, having tremendous financial results to their credit are likely to give sound footings and depth to the stock market but certainly elevate the stature of the share business to the international level.

While recommending the forthcoming OGDCL and SSGC as the sound and safe investment in the backdrop of their financial performance and the growing role of the gas sector in Pakistan's economy, Ahmed Baloch had some reservations over the offering of NBP shares at Rs46 which he feels on a higher side and may hardly call for a green shoe option this time.

Ahmed Baloch, however, appreciated the good economic decisions of the present government specially by the Security and Exchange Commission of Pakistan for its efforts for introduction of prudent measures for protection of the interest of the investors and strict discipline and innovative ideas in the capital market.

He attributed the recent trade fluctuations at the Karachi Stock Exchange mainly to law and order situation within the country while mounting tense situation across the border both on India and Afghanistan. As soon as the situation normalises, the trade at the capital market is likely to march towards its ultimately goal of crossing the mark of 5000 points at KSE index hopefully by the end of the current financial year.

Addressing the investors at a conference in Karachi, Dr. Hafiz Sheikh was optimistic about tremendous market capitalization to the tune of $20 billion from existing level of $17-18 billion, an impressive reinforcement worth $2 billion to the existing market strength.

The time has come when the international investors have to look towards Pakistan seriously because they seldom consider markets with less than $20 billion capitalization for investments. Dr. Hafiz Sheikh was of the opinion that the initial 2.5 percent shares plus an equivalent size of green shoe option would provide around Rs7 billion to the government.

The listing of the OGDCL shares was being scheduled for the last week of October or the first week of November that the investors may have enough time to withdraw their investment back in case they could not by the shares of National Bank of Pakistan. The public offering of NBP shares would take place on October 1-15.

The government had lined up the IPOs of Sui Southern Gas Company (SSGC) and Pakistan International Airlines (PIA) by December this year. Once these transactions are materialized, the government would announce the schedule of the next quarter for the IPOs of Pakistan State Oil (PSO), Habib Bank Ltd (HBL), National Investment Trust (NIT) and two power companies including Faisalabad Electric Supply Company and Jamshoro Power Generation Company.

OGDCL, it may be noted, had earned a record profits during the last two yeas due to the government's decision to allow the company to function purely on commercial lines under an independent board of director.

It would be the second largest listing of any state-owned entity on stock market after the Pakistan Telecommunication Company Limited (PTCL). There is no sign of a major drop in international oil prices, which could reduce the share rise of OGDCL.

Afzal Khan, the chairman OGDCL Board of Directors says that the company had contributed a record Rs33 billion revenues showing how the company was earning profits.

Dr. Hassan, the chairman of the Securities and Exchange Commission of Pakistan (SECP) while highlighting the potential for growth in the mutual funds industry to facilitate the stock markets said that the mutual funds can serve as an effective intermediate for achieving a real depth and breadth of bourses.

He said that as technology was altering and expanding traditional trading mechanism, so too was technology revolution in the dissemination of information.

Inaugurating the display only terminals (DOT), SECP chief said that he hoped that DOTs would not only facilitate investors by providing quick, up to date and reliable market data with summate ease, but also help achieving the objectives of the SECP through widespread and timely disclosure of market related information.

The DOTs have been introduced by the KSE in collaboration with Cyber Internet Services to offer customers access to the Karachi Automated Trading Systems (KATS) screens. Through an agreement between Cyber Net and KSE, the former would be hosting DOT at their data centers in Karachi, Lahore, Islamabad and Faisalabad in the first phase, which would be extended to other cities later on.