AdalFi plans PKR 652 million IPO to fund Islamic and small-business lending

Pakistani financial technology company AdalFi plans to raise up to PKR 652 million through an initial public offering as it seeks to expand its digital Islamic and small-business lending operations. The company says it would become the first fintech to list on the Pakistan Stock Exchange (PSX).

The Lahore-based company plans to offer 50.16 million shares, representing 10% of its post-IPO share capital, at a floor price of PKR 8.75 per share, according to details of the proposed offering.

Seventy-five percent of the shares will be allocated to institutional investors through book building, while the remaining 25% will be offered to retail investors. Arif Habib Limited is acting as lead adviser to the transaction.

AdalFi will use the proceeds to develop Islamic and small-business lending products, strengthen its technology and information security infrastructure, and support marketing activities.

"AdalFi's proposed listing would bring a technology-led business to the capital market and offer investors exposure to the growth of digital financial services in Pakistan," Shahid Ali Habib, chief executive officer of Arif Habib Limited, told Nukta.

How the platform works

AdalFi's digital lending platform has facilitated more than PKR 110 billion in loans since 2021, enabling banks to assess borrowers, approve applications and disburse financing through their digital channels.

The company uses artificial intelligence-based models to analyze bank-account cash flows and help lenders assess potential borrowers, including individuals and businesses with limited formal credit histories. Its models have been trained on more than 2.5 billion bank-account transactions, the company said.

Nine banks, including six of Pakistan's 10 largest lenders, use its platform. In total, 11 financial institutions operate 28 loan products through the system.

Banks provide funding and hold the loans, while AdalFi earns a share of the income generated through its platform and shares the associated credit risk.

Reach and borrowers

More than 750,000 loans have been disbursed to over 130,000 borrowers through the platform, according to the company. About 53% of borrowers were accessing formal credit for the first time, while lending operations had reached 990 towns across Pakistan.

"Millions of Pakistani consumers and small businesses have the ability to repay but have remained outside formal credit because traditional scorecards could not evaluate them," said Salman Akhtar, AdalFi's chief executive officer.

Akhtar said Pakistan had made significant progress in expanding access to banking through accounts and digital wallets, but access to financing remained a challenge, particularly for individuals and small businesses underserved by traditional lenders.

The proposed listing will support the company's next phase of growth, including expansion into Islamic digital lending and a larger footprint in the small and medium-sized enterprise sector, he said.