Agha Steel Industries Ltd is planning Pakistan’s biggest-ever private sector initial public offering (IPO) this year to help boost output as China funds more than US$55 billion in infrastructure projects across the nation and a buoyant stock market spurs investor demand.
The Karachi-based company plans to raise as much as 10 billion Pakistani rupees (US$95.41 million) selling a 25 percent stake, executive director Hussain Agha said in an interview.
The sale would be the largest since the government stake sale of Habib Bank Ltd in 2007 worth 12 billion Pakistani rupees.
Photo: Bloomberg
Steel and cement makers in Pakistan are expanding to meet demand as China’s “One Belt, One Road” initiative spurs construction.
The nation’s economy has grown at about 5 percent per year since 2013, encouraging Agha’s peers including International Steels Ltd and Aisha Steel Mills Ltd to lift production.
“You need roads, skyrises and housing,” Agha said. “Pakistan’s steel industry is in an infancy stage and growing at a massive pace — the whole environment will change.”
The company is to use the funds for a US$50 million expansion that could triple output to 500,000 tonnes within two years.
Production would then double to 1 million tonnes by 2023, he said.
Habib Bank has been appointed financial adviser, while Arif Habib Ltd and BMA Capital Ltd were picked as bookrunners for the transaction.
Pakistan’s steel output last year grew 23 percent to 3.6 million tonnes, the biggest gain among 40 nations, the World Steel Association said.
Agha Steel expects construction-grade steel, such as rebars and wire rods, to grow as much as 12 percent annually for the next three years.
The nation’s construction sector expanded 13 percent in the year ended June last year, more than twice the pace of the previous 12 months, the State Bank of Pakistan’s annual report said.
Rapid urbanization and rising income levels have left the nation with an annual shortfall of 500,000 homes, real-estate developer Arif Habib said.
“Real estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd, which has about 8 billion Pakistani rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”
In February, Pakistan imposed anti-dumping duties on Chinese imports of galvanized coils and sheets for five years to aid producers in a nation where steel usage per capita is almost half of its neighbor India, Agha said.
Favorable industry policies aside, some family-owned companies are also tapping investor demand that made the nation’s stock market Asia’s best performer last year.
Even so, less than six companies per year go public in Pakistan, a country where many businesses are conservative in risk taking and often unwilling to open their books to public scrutiny.
Amreli Steels Ltd has seen its shares more than double after raising 3.8 billion Pakistani rupees two years ago.
The company, whose products are similar to those manufactured by Agha Steel, has announced another expansion this month.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is