Panther Tyres Limited raised funds worth Rs2.63 billion through auction of 40 million shares to institutional, rich individual and retail investors at the Pakistan Stock Exchange (PSX) on Thursday.

The financing will be utilised for expansion of its tyre and tube manufacturing capacity.

The company got a share price of Rs65.8 each during the two-day (Jan 27-28) bidding process, which is better known as book building. The company made a new record during the auction as it sold shares at the upper limit. As per details, the company opened bidding at Rs47 per share, which could increase by a maximum of 40% to the upper limit of Rs65.8 in accordance with the prevailing laws.

“This has happened for the first time in history that any company has sold shares at the upper limit during the book building process … since the introduction of 40% cap rule a few years ago,” Initial Public Offering (IPO) Consultant Arif Habib Limited CEO Shahid Ali Habib told The Express Tribune.

“The purpose of the new issuance is to partially fund the company’s expansion project. The purpose of the expansion project is to enhance the production capacities of tyre sets and tubes (packed). State-of-the-art machinery is being imported for this enhancement,” the company said in its prospectus available on the PSX website. “The company expects the completion of expansion plan by the third quarter of fiscal year 2022 ie March 31, 2022,” it said.

The tyre set manufacturing capacity is planned to be enhanced by 21% to 9.8 million compared to 8.1 million at present. Similarly, the manufacturing capacity of tubes (packed) is designed to be increased by 34.6% to 42 million compared to existing 31.2 million.

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Elaborating the need for capacity expansion, the company said as per market knowledge, a significant part of tyre and tube industry of Pakistan was dominated by imported and grey market tyres and tubes.

“Recent initiatives taken by the Federal Board of Revenue – Customs Operations to curb money laundering, illicit movement of commodities and black economy will provide a window of growth to local tyre and tube manufacturers to capture the grey market share of tyres and tubes.”

Furthermore, because of 38% depreciation of the rupee against the US dollar over the last two years (FY 2019 and FY 2020), the price competitiveness of imported tyres in comparison to locally manufactured tyres had weakened, thereby, reducing the viability of imported tyres and tubes for the cost-conscious segment such as light commercial vehicles (LCVs), tractors, trucks and buses, it said.

“In order to fill the gap in the market and increase its market share, the company is planning to enhance its tyre and tube production capacities.” The company would offer 25%, or 10 million shares out of the total of 40 million shares on sale, to retail investors at Rs65.8 per share on February 3-4. The book building was oversubscribed by 4.4 times to Rs8.22 billion. The book building saw participation of 497 investors, which included major commercial banks, insurance companies, local and foreign institutions, asset management companies, TREC holders and high net-worth individuals.

Debt security listing

Besides, Bank Alfalah issued the Medium Term Note in the form of Term Finance Certificates (Tranche Series-A) of Rs11 billion through the Shelf Registration Programme, which were listed on the exchange on Thursday.

Published in The Express Tribune, January 29th, 2021.

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