PSX emerges as alternative to banks for capital funding

KARACHI: The Pakistan Stock Exchange (PSX) has emerged as a robust alternative to traditional banking channels for both government and private entities seeking to raise capital and debt, amassing Rs835 billion ($5.7 billion) in equity and debt financing in 2024.

As economic stability and activity rebounded, businesses turned to PSX to fund expansion plans, reversing previous years’ caution due to economic overheating.

Data from Arif Habib Limited (AHL) shows that five companies joined the main trading platform, while two were listed on the Growth Enterprise Market (GEM) Board, collectively raising Rs8.43 billion through initial public offerings (IPOs).

The bourse also enabled 10 listed companies to secure an additional Rs18.35 billion by issuing right shares to current shareholders, , according to The Express Tribune.

Also read: Total foreign sell-off in Pakistan stocks surpasses $124 million

In a first, the government leveraged PSX’s debt market to raise approximately Rs800 billion in domestic debt at rates 1-2% lower than conventional bank loans. Four listed companies also issued Rs8.56 billion in corporate debt on the exchange this year.

“The IPO market in Pakistan saw remarkable growth in 2024, spurred by a stable economy, easing inflation, currency stability, and monetary relief,” said AHL. The successful negotiation of a $7 billion International Monetary Fund (IMF) Extended Funding Facility (EFF) further contributed to a favorable climate for equity offerings, drawing strong investor interest.

The PSX’s benchmark KSE-100 Index climbed 42.4% in 2024, crossing 90,000 points, while the profitability of top firms in the index jumped 24.4% to a record Rs1.6 trillion for FY24. This momentum led to five IPOs on the main board and two on the GEM Board this year, a significant increase from a single IPO last year.