Zarea’s IPO: A game-changer for Pakistan’s digital commodity market

Zarea Limited, Pakistan’s leading B2B digital commodity trading pla9orm, is set to go public with an Initial Public Offering (IPO) that presents an attractive opportunity for investors seeking high-growth potential in the technology and e-commerce sector.

With a proven track record of rapid expansion, strong financial performance, and a strategic vision to disrupt Pakistan’s commodity supply chain, Zarea’s listing on the Pakistan Stock Exchange (PSX) marks a milestone in the country’s evolving digital commerce landscape.

Zarea Limited, is set to raise PKR 1 billion through its Initial Public Offering (IPO). The book-building process is scheduled for February 10-11, 2025, with the retail subscription portion open from February 17-18, 2025.

The IPO, managed by Topline Securities and Growth Securities as joint lead managers, will offer 62.5 million shares, representing 23.81% of its post-IPO paid-up capital, at a floor price of PKR 16 per share, through a 100% book-building mechanism.

Zarea operates on a business model that has already proven successful internationally. For instance, OFBusiness in India, a company with a similar model, is valued at over USD 5 billion and is preparing for its own IPO. Zarea aims to replicate this success in Pakistan by revolutionizing the commodity trading market through its innovative B2B e-commerce pla9orm, Zarea.pk.

The platform facilitates seamless transactions between buyers and sellers, delivering transparency, efficiency, and scalability. Since its inception, Zarea has emerged as a leader in Pakistan’s digital marketplace, operating across 30+ cities, completing over 11,000 transactions, and crossing 325k metric tons orders delivered.

Zarea Limited is backed by a highly experienced and diverse board of directors, ensuring strong corporate governance and strategic oversight. The board comprises industry veterans, financial experts, and technology leaders with extensive experience in corporate leadership, procurement, taxation, banking, and digital transformation.

CEO Ali Alam Qamar, a leading entrepreneur, has played a pivotal role in driving Zarea’s growth and market leadership. The board includes Sohail Wajahat Siddiqui (Sitara-i-Imtiaz), a former Federal Minister and ex-Managing Director of Siemens Pakistan, known for his expertise in corporate governance and energy sector reforms.

Additionally, Muhammad Afzal Chaudhry, a seasoned banker with over four decades of experience in credit and risk management, strengthens the company’s financial oversight. The board also includes Juneid Akram, a former senior official of Pakistan’s Federal Board of Revenue (FBR) with deep knowledge of tax policy, risk management, and regulatory compliance.

With a commitment to transparency, regulatory compliance, and stakeholder value, Zarea’s governance framework ensures sustainable long-term growth—offering investors’ confidence in the company’s leadership and operational integrity.

Zarea has demonstrated exceptional growth metrics over the past three years, achieving a 287% compound annual growth rate (CAGR) in net profit and a 235% CAGR in revenue, reflecting the company’s ability to scale rapidly. In a testament to its strong operational performance, the company’s 6MFY25 net profit has already exceeded its full-year FY24 profits.

Despite these impressive growth figures, Zarea is attractively priced with a 6.64x trailing P/E multiple, representing a 73.7% discount compared to the technology sector average of 25.24x. Moreover, since the floor price of PKR 16 was set, the market has risen by 50%, further enhancing the value proposition of this offering.

The IPO proceeds will be strategically deployed to drive Zarea’s continued expansion and operational efficiency. A significant portion of the working capital will be invested in Agri Biomass, a rapidly growing sector as businesses increasingly adopt renewable and sustainable energy solutions.

Additionally, 24% of the proceeds will be utilized to establish an in-house logistics model, allowing Zarea to transition away from third-party logistics providers. This move is expected to provide the company with better control over delivery timelines while improving profit margins.

Furthermore, 12% of the proceeds will be directed toward technology upgrades to ensure scalability and enhance the customer experience. The remaining funds will be allocated to marketing, human resources, and office expansion.

Currently, Zarea focuses on key commodity sectors such as steel, agri biomass, cement, and building materials. The company plans to expand its offerings into seven additional commodity categories, including fertilizers, chemicals, and agri perishables, unlocking new revenue streams and further diversifying its por9olio. With its Shariah-compliant status, Zarea presents an attractive opportunity for Islamic investors, while its 10-year tax holiday, granted under the Special Technology Zone Authority license, provides a significant competitive edge.

Established in 2020, Zarea leverages cutting-edge technology to streamline B2B procurement processes in Pakistan, ensuring efficiency and transparency in the commodity trading market. Inspired by the success of OFBusiness in India, Zarea’s innovative business model positions it as a frontrunner in Pakistan’s digital transformation journey.

With a compelling valuation, a strong financial track record, and a clear vision for growth, Zarea’s IPO is a golden opportunity for investors looking to gain exposure to Pakistan’s booming tech and ecommerce sector