Agha Steel IPO oversubscribed by 1.63 times

KARACHI: The book-building process of Agha Steel’s Initial Public Offer (IPO) has concluded with an oversubscription of 1.63 times, the company said on Wednesday.

“The IPO received an overwhelming response from institutional investors and high-net worth individuals as the strike price clocked in at Rs32/share, higher than the floor price of Rs30,” the steelmaker said in a statement.

“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.”

It said 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 said.

The company would use the IPO proceeds to finance the expansion of its re-rolling capacity from 250,000 to 650,000 metric tons, the steelmaker said adding that this would increase the reinforcing bar production capacity by 160 percent.

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 used in the construction of megastructures, roads, bridges, skyscrapers and homes.

AL Habib Capital Markets in a report said, “We expect the share price of Agha Steel to hover around Rs57 by June 2022”.

Furthermore, the target prices stated by Pearl Securities and KASB Securities are Rs50 and Rs42, respectively. Hussain Iqbal Agha, CEO Agha Steel, in a message on social media thanked investors for their overwhelming response and vowed to ensure growth of their shareholders’ equity.