A $70 million global depository receipt (GDR) issue for the local Hercules Cement, Pakistan’s first international equity issue this year, has been withdrawn from the market after just over a week, international trading sources said.
The issue’s withdrawal, after being launched in Hong Kong on 16 January, was blamed on poor market conditions, both internationally and locally. The Karachi Stock Exchange index (KSE) has been dropping since late 1994 and fell by a further 8 per cent this week to 1,787.50 (see Stock Market Watch). This compares with October levels of 2,324.67 (MEED 14:10:94, Stock Market Watch).
Local brokers say the decline is due to the continued political uncertainties, the cancellation of talks with the IMF, and the Mexican effect which has hit confidence in emerging markets
The GDR, which was being arranged by ABN Amro of the Netherlands, was to fund the equity portion of a $216 greenfield project financing for Hercules Cement, which was being set up by the local Nishat Group. The investors are understood to be seeking alternative financing for the project, according to local stock exchange sources.