SE Fruits IPO book filled in two hours: public offer on 28 and 29 September

SE Fruits and Vegetable Limited filled its book-building order book within two hours of opening on Monday, according to Business Recorder. For retail investors the date that matters is 28 and 29 September, when the general public portion opens.

Here is the offer in plain terms.

The numbers

• Shares offered: 30 million ordinary shares, 32.01 per cent of post-IPO paid-up capital
• Floor price: Rs 40 a share
• Price cap: Rs 64 a share, 60 per cent above the floor
• Book-building portion: 22.5 million shares, 75 per cent of the offer, bidding open until 22 September
• General public portion: 7.5 million shares, 25 per cent, on 28 and 29 September
• Raise: Rs 1.20 billion at the floor, up to Rs 1.92 billion at the cap
• Joint lead managers: Topline Securities and Growth Securities

What the company actually does

SE Fruits and Vegetable is based in Sargodha and was formerly Shaheen Enterprises. It exports kinnow, mangoes, potatoes and other produce to more than 22 countries. That is an unusual listing for the Pakistan Stock Exchange, where the board is dominated by banks, cement, fertiliser and energy. A pure agricultural export business is close to a first.

The company says the money goes into working capital: bigger seasonal procurement, more processing throughput, and turning export orders into revenue. For a business whose cash is locked up in fruit for months at a time between buying from growers and getting paid by importers, working capital is the binding constraint, so the stated use is at least coherent.

How the strike price gets set

In a book-built IPO the institutions bid first, inside the Rs 40 to Rs 64 band. The strike price comes out of that book. Retail investors on 28 and 29 September pay that strike price, not the floor. A book covered in two hours signals demand, and demand usually means a strike price above the floor rather than at it.

So the honest warning for anyone planning to apply next Monday: you do not yet know what you will pay. The strike price is announced after bidding closes on 22 September. Check it before you commit.

What to weigh

The upside case is straightforward. Kinnow and mango exports are a real foreign exchange earner, demand from the Gulf and Central Asia is growing, and a listed company has cheaper access to capital than a family exporter borrowing at KIBOR, which is at 12.34 per cent for the 12-month tenor.

The risks are the ones that come with farming. One bad kinnow season, a frost, a water shortage or an importing country closing a door on phytosanitary grounds hits revenue directly, and none of it is in the company's control. Freight rates and the rupee move the margin too.

A 32 per cent free float also means the founding family keeps control after listing, which is the norm in Pakistan but limits how much the market can discipline management.

To apply

You need a CDC sub-account with a broker. Applications for the public portion go through the PSX e-IPO system or your broker during the 28 and 29 September window. If the retail portion is oversubscribed, shares are allotted by ballot and the rest of your money is returned.

The rental yield calculator is the wrong tool for this one, but if you are weighing an IPO against a fixed deposit, our KIBOR page has the benchmark that bank rates are priced off.