Pak-Qatar Family Takaful’s IPO at PSX was oversubscribed by 3.2x, raising Rs 676m and marking Pakistan’s first-ever family Takaful listing.
First-Ever Family Takaful IPO at Pakistan Stock Exchange
Pak-Qatar Family Takaful Limited (PQFTL) has made history at the Pakistan Stock Exchange (PSX) with the first-ever initial public offering (IPO) by a dedicated family Takaful company. The strong response from both institutional and individual investors shows rising confidence in Islamic insurance as a growing part of Pakistan’s financial sector.
The oversubscription of the book-building process of IPO was 3.2 times and this is a strong indication that demand of quality Shariah compliant financial products is growing. This performance is particularly impressive in a market environment where investors have become more discriminative towards new listings.
Strike Price Settles at Rs 18.02 Per Share
IPO was priced at a floor price of 14 per share. Two days later, the book-building price was offered at Rs 18.02 per share and this price indicated a high level of bidding among the investor group.
Demand was approximately over 1.67 billion shares with a share issue of 525 million. This is the level of demand which meant that the company received an equity raising of about Rs 676 million, which provided PQFTL with new capital to aid in its next growth stage.
The IPO was regarded by the CEO of Arif Habib Limited, Shahid Ali Habib, who is the lead manager and book-runner of the deal, as a milestone in the history of the Pakistani Islamic insurance (Takaful) sector. He recorded that the oversubscription and premium to floor price is based on the positive perception of the company fundamental and long term prospects by investors.
How PQFTL Plans to Use the IPO Proceeds
Under the plans of the company, the finances obtained during the IPO will be spent to cover three priorities. Originally, PQFTL will aim at building its capital base to address regulatory and business expansion needs. The position of the company as a strong entity enables it to underwrite higher business without exceeding the prudent levels as stipulated by regulators.
Second, the company is focused on speeding up the establishment of online channels. This involves enhancement of online policy sales, customer self-service portal and online claims management. To most customers, particularly younger and technologically inclined families, access to digital information may be a determining issue between Takaful and traditional means of insurance.
Third, PQFTL will increase the number of Customer-oriented Takaful products. This may include additional flexible savings, family protection covers as well as education plans and health related offerings which are wholly compliant with the Shariah principles. Through expansion of its product offering, the company will seek to exploit the large, underinsured population in Pakistan.
Market Leader in Pakistan’s Family Takaful Segment
Pak-Qatar Family Takaful is not a new entrant into the market. It is the first and biggest sole family Takaful operator in Pakistan and it already enjoys a dominant position in the sector. The company is the largest player in this field with an estimated 44 percent market share of the total family Takaful sector.
PQFTL is even more dominant with a market share of approximately 90.47 percent in the segment of dedicated family Takaful. This leadership makes it provide good brand awareness among those customers who are interested in having a Shariah based financial protection to their families.
PQFTL has a market share of about 6.5 percent in the overall business in the wider life insurance and Takaful sector. The IPO in the PSX will increase the transparency, corporate governance and provide the company with easier access to new capital in the future, which can further facilitate its growth.
What the Oversubscribed IPO Means for Investors and Industry
As an investor, successful IPO will act as a new Shariah-compliant stock market alternative. Investors seeking to tailor their portfolios to the principles of Islamic finance can now have a firsthand experience of an expanding family franchise of Takaful that has an excellent track record and projected expansion strategies.
To the entire insurance and Takaful sector, the listing of PQFTL is a good omen. It demonstrates that the investor interest in properly managed Islamic financial institutions is noteworthy and that capital markets can be used to finance their expansion to a greater extent. The transaction can also help other Takaful operators and financial services companies think of using the equity market when the market is favorable.
On the whole, the 3.2 times over subscriptions, the high strike price of the premium and a solid market presence make this IPO a milestone, not only to Pak-Qatar Family Takaful, but also to the Islamic finance ecosystem in Pakistan.
