ABHI Microfinance Bank seeks PKR 2 billion to PKR 3 billion in IPO

ABHI Microfinance Bank Limited plans to raise PKR 2 billion to PKR 3 billion through an initial public offering (IPO) to expand its loan portfolio and strengthen its capital base, according to the bank’s prospectus published ahead of the share sale.

The bank will offer 132 million ordinary shares, representing 13.65% of its post-IPO paid-up capital, at a floor price of PKR 15 per share. The offering will comprise 75% through book building and the remaining 25% for retail investors and the general public.

The book-building portion will consist of 99 million shares, with investors allowed to bid within a price band extending up to PKR 22.50 per share. The final price will be determined through the book-building process.

The public subscription is scheduled for November 12–13, while eligible investors can register from November 2–6. The book-building process will take place on November 5–6, according to the prospectus dated October 30.

How will ABHI use the IPO proceeds?

The bank plans to deploy the proceeds primarily to expand lending and improve its capital adequacy ratio, or CAR, to meet regulatory requirements prescribed by the State Bank of Pakistan.

ABHI has yet to achieve the regulator’s minimum CAR of 15% and expects to reach compliance in calendar year 2027, limiting its ability to expand unsecured lending in the interim, according to the prospectus.

The bank plans to direct most of the additional lending capacity toward gold-backed financing, which carries a regulatory risk weight of 20%, compared with 100% for unsecured loans. This allows the bank to support a substantially larger secured loan portfolio for an equivalent amount of regulatory capital.

Gold-backed financing is projected to account for 88.73% of the bank’s average gross loan portfolio in 2026, declining to 85.37% in 2027. Unsecured branch banking is expected to account for 6.88% and 7.31%, respectively, while earned wage access, payroll-linked and digital lending are projected to contribute 4.40% and 7.33%.

The bank expects its markup income to rise to PKR 23.8 billion in 2026 from PKR 14.3 billion in 2025, increasing further to PKR 32.7 billion in 2027.

Net profit after tax is projected to reach PKR 2.93 billion in 2026 and PKR 4.13 billion in 2027, compared with PKR 1.02 billion in 2025. The projected profit margin is expected to improve to 12.6% in 2027 from 7.1% in 2025.

The projections follow losses of PKR 1.73 billion in 2023 and PKR 1.75 billion in 2024, according to the prospectus.

The bank’s lending strategy also reflects the risk profile of its portfolio. Gold-backed financing has an indicative yield of 38.3% and a projected portfolio-at-risk ratio of 1.7% in 2026, while unsecured branch lending carries an indicative yield of 45% and a portfolio-at-risk ratio of 2.7%. Earned wage access, payroll-linked and digital lending have an indicative yield of 18% and a projected portfolio-at-risk ratio of 0.8%.

ABHI Microfinance Bank operates in Pakistan’s microfinance sector, providing lending, savings, deposit and payment services to low-income households, salaried workers, microentrepreneurs and small businesses. Its products include gold-backed loans, earned wage access, salary-backed lending, advance salary financing and merchant financing.

The bank operates through branches and digital banking channels, with a network of more than 114 branches across over 108 cities in Pakistan.

It was incorporated in 2008 as Kashf Microfinance Bank Limited and was subsequently acquired by FINCA International in 2013, after which it was renamed FINCA Microfinance Bank Limited. ABHI (Private) Limited and TPL Corp Limited completed the acquisition of the bank on January 17, 2025, and it subsequently adopted its current name.

The retail portion of the offering will be fully underwritten. Investors will be able to submit applications electronically through the Pakistan Stock Exchange’s e-IPO system and the Central Depository Company’s centralized e-IPO system.