Mr. Shahid Ali Habib

By

Mr. Shahid Ali Habib Chief Executive Officer

Brief Profile  Leading Securities brokerage & Financial Services Firm  Brokerage Operation since 1970  One of few listed securities brokerage houses  Market Capitalization of 1.7 bn ( $ 17 mn)  Parent Company Market Capitalization of 11 bn ( $ 110 mn)  7 out of 13 equity issues over the last 3 years

 Around 7% market share in KSE traded volume  Top 25 companies award for 2008 and 2009, none ever got  CFA award for Corporate Finance and Equity Traders

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Overview of IPO Market  IPO activity globally  2012

768 companies

$ 118.5 bn

 2011

1,225 companies

$ 170 bn

 Local IPO activity - continuous decline over last 4 years  2012

3 companies

500 mn

 2011

4 companies

4,479 mn

 2010 8

6 companies

6,348 mn

No. Of IPOs 6,348

6 4

8,000

Amount (PKR mn)

6,000 4,479

6

4

2

4,000 2,000

3 500

0 2010

2011

2012

00 2013

PKR mn

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Promoting IPO Market  Promotion and development of IPO market are dependent on

following  Secondary Market Valuations  Regulators  Government  Issuers

 Advisors  Automation  Investors

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Secondary Market Valuation  Higher market valuation invites IPOs  Higher liquidity  Lower debt yields or other instruments  Existence of varied Investor Classes (Foreigners, Pension & Provident

funds, Banks, Mutual Funds)  Individual investors to follow big institutions

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Regulator’s Role  Amendments in Capital Issue Rules are required  One positive year of operation for asking premium should be removed  one uniform criterion for loan-based projects and equity-based projects

 Requirement of project appraisal from financial institution should be removed  Stock exchange verification of installation of P&E is not required  This will reduce the cost of raising equity currently 5%-6%  MNCs delisting should be eye opener for Regulators  Regulators should give relaxation/remove few condition like:  Minimum Application size;  To collect 500 applications of 500 shares;

 increase the percentage of book building portion – currently 75%  Delisting reasons should be addressed 6

Government  Providing fiscal benefits - Income Tax differential between Public and

Private Companies  Dividend withholding tax rate differential between listed & unlisted  Disinvestment of some stake of government entities like in the past 

OGDC,



PPL



HBL



Help discovering price for future privatization

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Advisor’s Role  Need to have proper intelligence and research team to look for prospective

issuers  Shariah compliant issuers should be marketed  Due diligence of an Issuer is a must!  Should do proper in-depth analysis and valuation of the issuer’s business

before bringing the Issue to Public;  Proper firewalls between CF and brokerage to maintain confidentiality  Ensure all material information is provided to investors/regulators for their

own/independent assessment  Advisory quality should be of utmost importance  Experienced team to provide first-rate advisory services

 Extensive Road Shows to prospective Investors  Country wide road shows to general public for wider participation 8

Issuer’s Role  Issuers should be encouraged for listing for expansion – key role for

advisors  Quality issues can easily attract wider interest and will multiply

capitalizations  Even in a challenging economies, companies prepared early for their

IPO journey are best able to leverage the windows of IPO opportunity when market recovers;  Disseminate appropriate and complete information to regulators,

advisors and investors;  Discuss its future plans with regulators, advisors and investors;  Conduct Road shows, presentations and awareness media campaigns;

 Ensure transparent utilization of IPO proceeds;  Keep its investors well informed by company’s strategy even after IPO 9

Automation (User Friendly)  Can increase general public investment in IPO by introducing

electronic/online subscription methods – some initiatives have been taken recently in the IPO of Aisha Steel Mills Limited;  Banks Collaboration is necessary for wider participation  Automatic opening of CDC account  Using ATM, Online and Mobile Banking  Easy mode to attract non resident funds  Awareness campaigns through print & electronic media  Investor friendly process of application filing

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Investor’s Role  Assess the IPO opportunity meticulously including, but not limited to:  Sector analysis  Economic analysis

 Company analysis  Sponsors’ profile  Comparative analysis, etc

 Attend investor presentations  Carefully review/analyze the Prospectus/OFSD  Follow the regulatory procedures  Fundamentally strong scrip is a better investment opportunity than

the speculative one!

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Thank You

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