ABHI IPO Oversubscribed by 59%, Yet Share Price Barely Rises

KARACHI, Nov 7 (Focus Pakistan) - Investors asked for 157 million shares of ABHI Microfinance Bank this week. The bank offered 99 million. When bidding closed, the price had moved just 50 paisa.

The ABHI IPO cleared its book-building round 1.59 times oversubscribed, with the strike price settling at Rs15.50. That’s only 3.3 percent above the Rs15 floor, and well short of the Rs22.50 ceiling the price band allowed.

The gap comes down to how book-building works. The strike settles at the highest price where bids still cover all 99 million shares. In ABHI’s case, that point came at Rs15.50.

PSX bidding data show the pattern clearly. At the Rs15 floor, bids covered roughly 159 percent of the shares on offer. At Rs15.50, coverage narrowed to about 106 percent. Demand thinned fast as the price climbed.

ABHI highlighted the broader demand, saying bids exceeded Rs2.4 billion and attracted foreign funds alongside domestic institutions and wealthy investors.

Institutions and high-net-worth investors will pay about Rs1.534 billion for their shares. The bank has reserved 33 million shares for public subscription on November 12 and 13. Four underwriters have committed to cover any shortfall, supporting the planned Rs511.5 million public tranche. The total comes to Rs2.046 billion, near the bottom of the Rs2 billion to Rs3 billion ABHI had targeted.

The 132 million new shares make up 13.65 percent of the bank’s post-IPO capital, according to the prospectus.

The money matters more than the headline figure suggests. ABHI closed 2025 with negative equity of Rs397 million. By June 30, shareholders’ equity stood at Rs3.11 billion. Profit explains only part of that jump. The bank also booked Rs2 billion as an advance against the issue of new shares, according to its half-year results.

The capital gap has narrowed but not closed. ABHI’s capital adequacy ratio stood at negative 20.28 percent at the end of 2025 and negative 6.26 percent on June 30, against the State Bank’s 15 percent minimum.

So where does it go from here? By the bank’s own model, the ratio ends 2026 at 4.3 percent before some capital adjustments. Count those adjustments and it rises to 7.31 percent. That’s still less than half the requirement. ABHI says it gets past 15 percent in 2027 and finishes that year at 17.77 percent.

The timetable carries a complication. The State Bank has granted ABHI relief from the minimum ratio, and the prospectus shows that relief expires on October 11, 2027. The bank says it will cross 15 percent “during CY27,” but its forecast gives only a year-end figure. The numbers don’t show whether the ratio clears the bar before the relief runs out.

ABHI started in 2021 as an earned wage access app, letting employees draw part of their salary before payday. It had no banking licence and no branches.

Then it bought a bank. ABHI teamed up with TPL Corp, and in January 2025 the two closed a deal for 94.8 percent of FINCA Microfinance Bank. By February, the lender carried the ABHI name. PSX disclosures show ABHI (Private) Limited owns 73.73 percent ahead of the listing. TPL Corp holds the rest.

The turnaround came quickly. The bank lost Rs1.754 billion in 2024. In 2025, its first full year under new owners, it earned Rs1.019 billion after tax. It then beat that in six months, posting Rs1.502 billion for the first half of 2026. Management forecasts a full-year profit of Rs2.927 billion.

ABHI plans to put the proceeds into a bigger loan book and a stronger capital base. Arif Habib Limited, Topline Securities and Growth Securities are managing the offer as joint lead managers.

Institutions turned up in numbers but didn’t push the price far above the floor. On November 12 and 13, retail investors must decide whether a fast-growing lender still rebuilding its capital looks like a bargain at Rs15.50.