Pakistan's Symmetry Group set to raise tech sector 'quality' bar with 2023's first IPO

Symmetry Group Limited — with an aim to work on the development of artificial intelligence (AI) and data-powered marketing technology, tools, and platforms — is set to launch an initial public offering (IPO) and intends to hold the book building on August 8-9.

It will be 2023's first and according to the company, the biggest tech sector IPO.

Walking the Geo.tv down the entire journey of the IPO, Symmetry Group Limited chief executive Sarocsh Ahmed explained how August was the optimal time for the launch.

“The timing is carefully considered, accounting for approvals from the Pakistan Stock Exchange (PSX) and the Security and Exchange Commission of Pakistan (SECP). The optimal timing for the IPO considers market and economic conditions, as well as the broader political landscape,” he said, adding that the company has been planning this IPO since 2021.

Ahmed — whose company is offering 101,240,082 shares as part of the IPO — maintained that it was a long wait and the work was going on, and now they have reached the level that they need funds to continue the expansion plans.

He stated: “If we look into that context, we all, in fact, management and the advisers were waiting for [some clarity regarding] the International Monetary Fund (IMF) [programme] and now that [standby deal has been signed] the stock market has responded well to it.

“Plus, another important factor to look at was the approval from PSX and SECP, so the last approval we had to have was from the SECP. And that we received it on June 1.”

He went on to explain that it was a time-bound approval and the company — which would be listed on the main board of PSX — needed to close the IPO by August 31. “We’ve fixed August 8 and 9 for the book building as we cannot delay this because we have the public portion and refund phase as well after that,” he added.

Referring to the bullish momentum at the benchmark KSE-100 index, the tech firm's Co-founder said "he feels there couldn’t have been a better time than now… we do see stability, at least for six months Pakistan will not default, that's a good thing.”

Shedding light on his expectations from the book building — a process undertaken to elicit demand for shares offered through which bids are collected from the bidders and a book is built which depicts demand for the shares at different price levels — stage, Ahmed revealed that the response so far was overwhelming and “I personally believe we'll have an oversubscription.”

Ahmed, while sharing why the company decided to keep the floor price at 4.25 per share, said: “We had to keep the floor price at low levels because when we were taking approvals, the market wasn’t performing this well and plus the general feedback that we received from investors was that the initial price of Rs5.50 was too high so we revised our strategy and gave a discount.”

He further added that now the company is leaving it to the market to discover the strike price and with the recent rally at the PSX “we are hopeful that the market is in a state where our strike price can be higher.”

‘All digital indicators are on the rise'

In response to a question regarding the effect of an increase in taxes on digital services in the recent budget on his company and in general, Ahmed highlighted that “data consumption has increased, we see, in every budget, there is an increase in taxes but did we observe any negative impact of it?”

“All the digital indicators are on the rise including mobile, broadband subscriptions and issuing licences of digital banks, digital transactions, and e-commerce,” he maintained, adding, “There is another indicator which is digital channels such as social media and there is a rise in their traffic”.

Highlighting the good from one of the major challenges — rising population — the Co-founder said “we should not miss our population growth which is very high”. “It is a problem but there is an opportunity in that too. Every year, a new number of people emerges as a user. When they graduate, they are natives of the technology,” he stated.

HR — main resource in Pakistan

Ahmed, while commenting on the actual IT potential in Pakistan, highlighted that the main resource Pakistan has is HR (human resources).

“Some of our clients from the Middle East who are outsourcing their business and who used to go to India are now diverting towards Pakistan because their cost in India has doubled. Their currency has become strong and the resource asks for more money given the global inflation,” he explained.

“Currently, in Pakistan, we can see a huge discount in resource hiring which is a huge benefit and if we connect it with our HR and offer timely products and solutions and market them, then we can generate good revenues.”

“When officials claim that we will have exports worth $20 billion in the IT sector in the next five years. We can do that and there is nothing wrong with this. Currently, the numbers are half reported and the main reason is the exchange rate difference, most people divert their money to other kinds of investment or hold it outside the country.”

“Meanwhile, the money brought into the country by freelancers is counted under the head of home remittances, and if we properly record these numbers then it may be counted as nearly $4 billion of our IT exports.”

He claimed that the problem was not that digital growth would stop due to the brain drain because consumption was there — people are talking about inclusion and digital banks. “Easypaisa and JazzCash have transformed society, the market is there, people consume mobile data for whatever reason — be it entertainment or work.”

Quality should come first

Ahmed highlighted that the potential of freelancing is huge in Pakistan and in order to provide a platform for this industry, the private sector should step forward. “Freelance associations should work more vigilantly to support the industry,” he said while identifying the biggest challenge — which needs to be controlled as well — is quality.

“Pakistan’s problem, not only in freelancing but other industries too, is fraudulent activities — i.e. charging money from clients but not delivering work on time. Because of such activities clients will outsource work to your company only once and then poor rating will shrink your client list and badly reflect on the country as well,” he maintained.

Startup owners need to bootstrap

The Co-founder of a company further added that all startups needed to bootstrap — i.e. getting oneself into or out of a situation using existing resources — and they should not go lavish on expenses because burnout models would no longer work as the world has progressed far more than anticipated in the past one year and “we can see that funding has stopped pouring in Pakistan.”

He explained that “inflows take a backseat only when companies don’t offer profit/bottom line”.

“Business models have changed — previously it was all about getting traction or a number of users on topline and a lot of times it was only about the number of users and not about profit. Time has changed. We now need a profitable business. All our startups need better financial advisory where they are encouraged to build profitable and sustainable businesses. The problem is that if one raises $20 million — the amount is huge especially when working in Pakistan — how can one burn all the money in one year?”

“I personally believe that pitchers should always have less money compared to what they have demanded. They should get a reasonable amount which is used to fulfil their requirements and then they should go for the next round in that manner the startup owners will know that they have to strictly work on something but if they get extra money of which he/she has no plan then it won’t work.”

“First and foremost we need to correct our intentions because we [Pakistanis] have a habit of doing fraud which is not good — neither for the industry nor for the country. And secondly, we should work on our bottom lines, bootstrap ourselves and take baby steps to grow,” he added.