By Farooq Awan

The successful listing of Service Long March Tyres Limited (SLM), the first Chinese-owned company to go public on the Pakistan Stock Exchange (PSX), marks a significant milestone in Pakistan-China industrial cooperation and highlights the growing role of Chinese investment in developing Pakistan's tyre manufacturing industry and strengthening its position in international export markets.

SLM recently completed Pakistan's largest-ever initial public offering (IPO), raising Rs7.78 billion and attracting approximately 35,565 applications from institutional and retail investors. The company said the book-building portion was oversubscribed by 16.7 times and was fully subscribed within five seconds, while the retail portion was oversubscribed by 7.6 times, reflecting strong investor confidence in the company's growth prospects and Pakistan's manufacturing sector.

The IPO comprised 389.7 million ordinary shares, representing five percent of SLM's post-IPO paid-up capital. While the floor price was set at Rs14.25 per share, strong demand during the book-building process resulted in a strike price of Rs19.95 per share, increasing the transaction size from Rs5.55 billion to Rs7.78 billion.

The offering attracted participation from commercial banks, mutual funds, development finance institutions, insurance companies, investment banks, pension and employee funds, brokerage houses, high-net-worth individuals, foreign investors and retail investors.

SLM’s ownership structure consists of a 51 percent stake held by Servis Group, 44 percent by China’s Chaoyang Long March Co. Ltd., and 5 percent by Myco Corporation. Pakistan has designated the $300 million venture as a Sole Enterprise Special Economic Zone (SESEZ).

The company represents one of the most prominent industrial partnerships between Pakistan and China. The venture established a state-of-the-art tyre manufacturing facility at Nooriabad in Sindh and has emerged as Pakistan's largest truck and bus radial tyre manufacturer.

Beyond the record-breaking size of the offering, the listing carries strategic significance for Pakistan-China economic cooperation. Service Long March Tyres has become the first Chinese-owned company to be listed on the Pakistan Stock Exchange, marking a new milestone in the evolution of bilateral industrial and financial ties.

Observers describe the transaction as a landmark development because it brings a major Chinese-backed manufacturing enterprise into Pakistan's public capital market for the first time. They believe the listing could provide a model for future Chinese industrial investments seeking to expand operations and raise capital in Pakistan as CPEC enters a more industry-led phase.

The listing also reflects the growing diversification of Pakistan-China economic cooperation into manufacturing and industrial investment. Unlike many earlier collaborations that focused on infrastructure and energy, the Service Long March venture represents a partnership in value-added manufacturing aimed at serving both domestic and international markets.

The successful IPO is seen as evidence that Chinese-backed industrial projects in Pakistan are beginning to attract wider investor interest and participation through the country's capital market.

A gong ceremony was held in Karachi on Monday to commemorate the listing, where Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb described the project as a proud milestone that was developed during the COVID-19 period with Chinese expertise and investment.

He said the company is on track to achieve exports of $100 million next year, adding that Service Long March had demonstrated how Pakistan can pursue industrial growth through an export-led model.

Aurangzeb noted that Pakistan recorded 11 IPOs during the current fiscal year, reflecting growing investor confidence in the country's economy and capital markets.

Speaking at the ceremony, YOU Hang, Executive Vice President of China Financial Futures Exchange and Shareholder Director at PSX, said the success of the IPO demonstrated confidence in Pakistan-China cooperation and would contribute to strengthening industrial capacity, creating employment opportunities and reducing foreign exchange expenditures. He said the achievement could serve as a model for other Chinese enterprises seeking to invest and grow their businesses in Pakistan.

Pakistan Stock Exchange Chairman Ruhail Muhammad said the listing underscored the importance of Pakistan-China collaboration as the China-Pakistan Economic Corridor (CPEC) moves into a more industry-led phase.

He noted that while the first phase of CPEC focused primarily on addressing Pakistan's energy shortages, the next phase is expected to promote industrial and financial integration. According to him, Service Long March Tyres, as a Pakistan-China joint venture listed on the PSX, represents a significant milestone in that transition.

SECP Commissioner Ali Farid Khwaja described the listing as a celebration of both the success of CPEC and the growth of Pakistan's capital markets. He said the IPO set records in demand and subscription while demonstrating strong investor confidence in the company and its future prospects.

SLM Chief Executive Officer Omar Saeed said Pakistan had established itself as a tyre-exporting country and that the company intended to enter new international markets every year. He said the fresh capital raised through the IPO would support expansion plans and help strengthen Pakistan's position in both truck and passenger car tyre segments.

Credit: INP-WealthPk