KARACHI: The Initial Public Offering (IPO) of Agha Steel has received overwhelming response from investors as it was oversubscribed at the book building phase on Wednesday.
The IPO received an overwhelming response from institutional investors and high net worth individuals as the strike price clocked in at Rs32 per share, higher than the floor price of Rs30, a statement said.
The book-building phase of the Initial Public Offer (IPO) of Agha Steel concluded with investors oversubscribing it by as much as 1.63 times.
This means Agha Steel is going to raise Rs3.8 billion in total, making it the largest IPO in the steel sector and the second-largest IPO in the private sector.
Brokers and investment advisory firms had issued almost unanimous calls to ‘subscribe,’ which resulted in investor demand amounting to Rs4.4 billion against the IPO’s book-building size of Rs2.7 billion.
The general public will subscribe to the remaining 30 million shares (25 percent of the total offer size) on Oct 14-15 at the strike price of Rs32.
The company will use IPO proceeds to finance the expansion of its re-rolling capacity from 250,000 metric tons to 650,000 MT. It will increase the reinforcing bar production capacity by 160 per cent.
Brokerage houses anticipate steady growth in the company’s bottom line owing to a substantial rise in construction activities across the country. The main product of Agha Steel is reinforcing bars that are used in the construction of megastructures, roads, bridges, skyscrapers and homes.
In a research report last week, AL Habib Capital Markets stated that it expected the share price of Agha Steel to hover around Rs57 by June 2022. The target prices stated by Pearl Securities and KASB Securities are Rs50 and Rs42, respectively.
In a message on social media, Agha Steel CEO Hussain Iqbal Agha expressed his gratitude to investors and their historic overwhelming response. He vowed to ensure growth of their shareholders’ equity.