The book-building process for Fast Cables’ Initial Public Offer (IPO) has concluded with an impressive oversubscription of 1.57 times, according to AKD Securities Limited, the IPO’s book runner. This oversubscription highlights significant market confidence in Fast Cables, with robust demand amounting to Rs4.7 billion against the issue size of Rs3 billion.
The strike price was set at Rs24.45 per share, surpassing the floor price of Rs23.5, which reflects the strong appetite for the company’s shares among investors.
PURPOSE AND UTILIZATION OF FUNDS
The primary objective of the IPO is to fund capacity enhancement, including investments in buildings, plants, and machinery. Additionally, part of the raised funds will be allocated towards repaying loans taken for building construction and imported machinery.
Fast Cables plans to acquire new land, construct buildings, and install advanced technology machinery to support these initiatives.
MARKET POSITION AND PRODUCTION CAPACITY
Fast Cables, a leading local manufacturer of high-quality electrical cables and conductors, maintains a strong position in the Pakistani cable market. As of June 30, 2023, the company’s annual production capacity stands at 8,400 metric tons for copper products and 13,800 metric tons for aluminum products.
The company is recognized as a pioneer in Pakistan for introducing Catenary Continuous Vulcanization (CCV) line technology and establishing an Aluminum Alloy plant. The CCV line’s cutting-edge technology ensures a product lifespan exceeding 40 years, offering exceptional durability and reliability.
INDUSTRY GROWTH AND DEMAND DRIVERS
The positive outlook for Fast Cables is underpinned by the rising demand for electricity, driven by population growth and increasing infrastructure development. With the construction of new houses, industries, and other infrastructure each year, the demand for electricity continues to grow, putting more constraints on the existing supply.
In FY22, NEPRA issued 12 generation licenses with a cumulative capacity of 201.42 MW and 7,032 licenses for net metering-based systems with a cumulative capacity of 243.43 MW to consumers in various DISCOs. The goal is to introduce new capacity to replace costlier options and meet the growing electricity needs in Pakistan.
The induction of new power generation capacity through various technologies is expected to drive higher demand for cables and conductors as these projects are implemented and become operational.
EXPANSION IN SOLAR CABLE CAPACITY
The increasing adoption of solar power presents a significant opportunity for Fast Cables. To capitalize on this, the company has increased its solar cable production capacity by 400% and plans to continue expanding in line with the sector’s demand growth, according to the company’s management.
Fast Cables’ successful IPO and its strategic focus on capacity enhancement and technology adoption position it well to meet the rising demand for electricity infrastructure in Pakistan. The company’s proactive approach to expanding its production capabilities and leveraging advanced technologies underscores its commitment to growth and sustainability in the competitive market.
