Air Link IPO : Air Link Communication Ltd. plans to raise at least 5.85 billion rupees ($36 million) through an initial public offering (IPO) this month, which would be the largest from a non-state firm in Pakistan.
The Lahore-based company plans to sell new and existing shares at a price between 65-91 rupees each, Chief Executive Officer Muzzaffar Hayat Piracha said in a reply to queries Friday. It will take investor orders on Aug. 30 and 31 and then price the offering. The company expects its revenue to triple to 129 billion rupees and net income surging 500% to 9.2 billion rupees by fiscal 2025 from 2020, according to Nasir.
Pakistan has seen a record streak of IPOs this year. Air Link, which started operations about a decade ago and has since become one of the largest distributors of phones in the country, saw sales rise 50% to 3.6 million units in year ended June.
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The company plans to issue 60 million new shares and Piracha will sell 30 million from his holdings, said Kamran Nasir, CEO at JS Global Capital Ltd., consultant and bookrunner to the transaction.
The IPO will be the largest since Interloop Ltd. raised about 5 billion rupees in 2019. Air Link, which has also recently expanded into mobile assembling, plans to use the funds to expand its distribution network. It aims to have 150 outlets by 2026 from 14 currently, which will boost margins together with the assembly business, said Nasir.
According to the draft prospectus, Air Link Communication Limited operates in the communications equipment sector and is one of the leading distributors of mobile phone devices in Pakistan with a market share of around 20-25% according to mobile phone import data.
The Company entered into distribution agreements with leading mobile phone manufacturers namely, Apple, Samsung, Huawei, TCL and Tecno and currently operates three flagship retail outlets, two in Karachi and one in Lahore. The Company has a countrywide distribution network consisting of 16 regional hubs linked to 1,000+ wholesalers and 4,000+ retailers to facilitate nationwide sales of mobile phones and accessories.
The Company is the official partner of Samsung Mobiles and Tablets in the territory of Pakistan & Afghanistan. It was also awarded “Platinum National Distributor” and “Sustainable Channel Growth Partner” by Huawei.
The proceeds will be utilized to establish additional retail outlets and inject working capital for further expansion of its distribution and retail network in more cities of Pakistan.
“There is a huge demand for smartphones in Pakistan owing to the growing population. The conversion rate from feature phones to smartphones is quite high whereas the introduction of ride-hailing services like Careem and Uber has further boosted the demand for smartphones in the country,” stated the prospectus.
“Device Identification, Registration and Blocking System (DIRBS) by Pakistan Telecommunication Authority (PTA) has significantly enhanced the demand for documented imported phones by blocking all grey market (smuggled) phones, which are estimated to be around 30-35% of the overall mobile phone market. The growing e-commerce industry will further enhance the demand for smartphones.”
Pakistan’s telecom sector witnessed significant growth after the introduction of 3G and 4G in 2014. 3G and 4G supported the growth of e-commerce which in turn led to an increase in demand for smartphones.