ABHI's IPO opens with the bank's capital ratio still below zero
The Rs1.98 billion offer lifts the microfinance bank's capital ratio only to about negative 4.3 percent, short of the State Bank's 15 percent minimum. The prospectus relies on forecast profits for the rest.
ABHI Microfinance Bank opens book building on 5 November for a Rs1.98 billion share offer, and its own draft prospectus says the money alone will not bring the bank up to the State Bank of Pakistan's capital minimum. The bank's capital adequacy ratio was negative 6.26 percent at 30 June. The offer at the floor price lifts it only to about negative 4.3 percent. The prospectus reaches 7.3 percent by the end of 2026 and 17.8 percent by the end of 2027 only by adding forecast profit, Rs2.93 billion for 2026 and about Rs4.1 billion for 2027, along with other capital adjustments. The minimum for microfinance banks is 15 percent.
The offer is 132 million ordinary shares of Rs10 each, with a floor price of Rs15 and a ceiling 50 percent higher at Rs22.50. Book building takes 99 million shares, or 75 percent, on 5 and 6 November, and retail subscription follows on 12 and 13 November. The floor raises Rs1.98 billion and the ceiling about Rs2.97 billion. Anything above the floor goes to balance sheet growth and capital. The prospectus counts the new shares as 13.65 percent of the 966,888,711 shares in issue after the offer.
Capital before price
The bank, formerly FINCA Microfinance Bank, was bought by ABHI (Private) Limited and TPL Corp in January 2025. Its equity moved from a deficit of Rs397 million at the end of 2025 to a positive Rs3.11 billion at 30 June. Profit of Rs1.50 billion in the half and a Rs2 billion advance from ABHI (Private) Limited against future shares account for almost all of that Rs3.5 billion swing. The State Bank has relaxed the 15 percent requirement until October 2027, and lets the bank hold more than 35 percent of its loans in gold backed lending until November 2029. Gold loans are about 90 percent of its earning assets and carry a 20 percent risk weight, against up to 100 percent for unsecured loans.
The prospectus puts the floor price at 5.40 times trailing twelve month earnings, a 30.47 percent discount to the banking sector's 7.76 times, and at 2.69 times book value after the issue, against the sector's 2.20 times. Those terms come from the draft prospectus placed on the PSX website on 3 August, which a supplement due within one working day of bidding closing will update.
Our reading
The price looks cheap on earnings and ordinary on book value, and half of the 2026 profit it rests on is still management's forecast. The prospectus's share table counts 966.9 million shares after the offer, but its post issue earnings per share uses 1,167 million, because the Rs2 billion advance is to become 200 million shares once the securities regulator approves. On that count the floor price values the bank at about Rs17.5 billion, six times the 2026 forecast of Rs2.93 billion and about 17 times the Rs1.02 billion earned in 2025. It also means the shares sold to the public would be about 11.3 percent of the bank, not 13.65 percent.
Profit has also not yet turned into cash. In the first half the bank's operating cash flow was negative Rs2.42 billion while borrowings roughly doubled, from Rs3.67 billion to Rs7.67 billion. That is normal for a lender whose loan book is growing, because loans leave as cash, but it makes the capital plan depend on the book growing profitably and on funding staying available.
The deadline that matters is October 2027, when the capital relaxation ends. On the prospectus forecast, the ratio clears 15 percent only at the end of that year. The next dates are nearer: the strike price and supplement are due within one working day of bidding closing on 6 November, and retail subscription runs on 12 and 13 November.
