Packaging film firm plans Rs1.47b IPO

Packaging film firm plans Rs1.47b IPO

International Packaging Films (IPAK) has planned to raise at least Rs1.47 billion through the sale of 70.1 million of its shares at prices starting from Rs21 per share on the Pakistan Stock Exchange (PSX) early next month.

PSX book building rules allow a maximum 40% increase in the share price to Rs29.40 during bidding from the floor (initial) price on the two-day initial public offer (IPO) scheduled for the second week of May 2024. The offer of 70.1 million shares equates to 10.1% from the paid-up capital after the company’s IPO.

In a statement, the company announced that it will use the proceeds from the IPO for the early repayment of a long-term loan obtained to finance an expansion project, namely, establishing a manufacturing facility for BOPP and BOPET films. The group claims it is the largest producer of flexible films and collectively offers a diverse portfolio of packaging solutions, producing BOPP, CPP and BOPET films. It is the first group in Pakistan to provide one-stop flexible packaging solutions and is working in three important strategic locations in the country.

IPAK, along with its subsidiaries – Actor Packaging Films, Petpak Films and Global Packaging Films, collectively form the largest flexible packaging film manufacturing group in Pakistan, with a total nameplate capacity of over 150,000 tonnes per annum, spread over an area of 50 acres. The share issue (IPO) is being made through a 100% book building process where bidders will bid for 100% of the issue. However, the successful bidder will only be allocated 75% of the shares and the remaining 25% will be offered to retail investors.

In case, the retail portion remains unsubscribed, the unsubscribed shares will be allotted to the successful bidders on a pro rata basis. International Packaging Film recorded net sales of Rs19.9 billion in financial year 2023 while its gross margin was 27% and profit before tax stood at Rs2.9 billion.

The company’s net profit was Rs1.6 billion for the year. Its three-year yield (compound annual growth rate – CAGR) remains at 41%. In addition to meeting local demand and replacing imported products, the company also exports its products to North America, Europe, Africa, the Far East and Middle Eastern countries such as Saudi Arabia and Oman, earning foreign exchange for the country.

The statement quoted IPAK Group Chief Executive Officer Naveed Godil as saying that his company is expected to earn $15-20 million through exports in the 2024-25 financial year.

Arif Habib Ltd (AHL) Chief Executive Shahid Ali Habib said investors have an attractive opportunity to invest in International Packaging Films, Pakistan’s largest producer of flexible packaging films, with a three-year yield (CAGR) of 41% and an alluring P/E of forward (price-to-earnings) and P/B (price-to-book) multiples of 4.2 times and 0.8 times, respectively.

AHL and AKD Securities have been mandated by IPAK to act as lead manager and joint lead manager, respectively, to raise funds through the IPO.

Founded in 2015, the firm started work as a greenfield project to produce Biaxially Oriented Polypropylene (BOPP) films through a production line acquired from Bruckner Maschinenbau (Germany).