Pakistan set for up to 16 IPOs as three-year stock rally tops 300%

The benchmark KSE-100 Index has gained over 47% this year, one of the best performers in the world

Pakistan’s blistering stock rally and surging retail participation are drawing companies back to the equity market, setting up what bankers say could be a banner year for initial public offerings in 2026.

Two of the country’s prominent investment banks — Arif Habib Ltd. and Ktrade Securities Ltd. — have a combined pipeline of as many as 16 IPOs over the next seven months. That compares with 11 listings in the past three years.

The benchmark KSE-100 Index has gained over 47% this year, one of the best performers in the world, helped by an uptick of interest by domestic investors, extending a bull market into a third year. With valuations now reaching long-term averages, offerings are set for a comeback.

“Current market valuations are attractive for raising equity,” said Shahid Ali Habib, chief executive officer at Arif Habib, which expects to bring as many as eight offerings through June. Stability in the Pakistani rupee and a favorable interest-rate environment provide strong tailwinds for capital markets, he said.

Some companies are tapping the market to help fund plans to increase production capacity. They’re anticipating a pickup in economic growth, according to Habib, who said the upcoming offerings include firms from consumer, pharmaceuticals and auto sectors, among others.

Ktrade Securities expects to manage public offerings of at least six companies in the next six months. JS Global Capital Ltd. plans to list as many as six companies next year, said Chief Executive Officer Khalil Usmani.

Companies in the pipeline include Service Long March Tyres Ltd., a joint venture between Servis Group and China’s Chaoyang Long March, which is set to raise as much as 6.5 billion Pakistani rupees ($23.2 million) by April, potentially making its the country’s biggest IPO in years, according to Habib. Saraaf, a commodity sourcing startup that raised 1.5 billion Pakistani rupee ($5.4 million) in Shark Tank in 2024 is also planning to come to market and Matco Foods Ltd. plans to spin off its Falak Foods unit, according to Omar Salah Ahmed, a managing director at Ktrade.

Despite a fourfold increase in equity prices over the past three years, primary markets stayed dormant. Growing confidence among retail investors is now reversing that, creating the liquidity companies need to test the IPO market again.

Nearly 36,000 new trading accounts in the South Asian country were opened in the September quarter, compared with 23,600 new registrations three months back, according to Topline Securities. Trading activity has also increased, with daily turnover on the Pakistan Stock Exchange topping $200 million in October, the highest since 2017, data compiled by Bloomberg show.

“I think it’s very likely 2026 to be a record year for IPOs,” Ktrade’s Ahmed said by phone. “Valuations are finally becoming attractive for sponsors to actually consider listing their entities.”

Still, participation in equity markets among households in Pakistan remains well below levels in countries in the region like Sri Lanka and especially India, where IPOs hit a record 1.77 trillion rupees ($19.6 billion) this year. And with the KSE-100 up more than 300% over three years, the market is showing signs of overheating: The index is trading at nearly 8 times forward earnings, compared with its long-term average of about 6.4 times.

Foreign investors have also been far less enthusiastic than locals. They have been net sellers in nine of the past 11 years and pulled $321 million from Pakistan this year, the most since 2021.

Pakistan’s economy is regaining ground after it came close to defaulting on its debt in 2023. S&P Global Ratings and Fitch Ratings upgraded the country’s ratings this year, citing improved fiscal management and reform momentum under Prime Minister Shehbaz Sharif’s International Monetary Fund-backed programs.

In addition, efforts by Field Marshal Asim Munir, who is widely seen as the nation’s most powerful leader, to improve US ties have supported equities. Munir’s elevation to a new role until 2030 is also seen as prolonging stability.