Sitara Petroleum eyes one of biggest IPOs in recent years

Sitara Petroleum Service Ltd., Aramco backed GO’s fuel station operator and transporter, plans to launch an initial public offering next month to raise up to PKR 3.2 billion ($11.4 million) to fund expansion of its retail network, fleet and storage infrastructure, Shahid Ali Habib told Nukta.

Habib, chief executive officer of Arif Habib Ltd., the lead manager and consultant to the issue for the transaction, said the listing could rank as one of the Pakistan’s largest in the past few years, based on available market data.

The planned offering comes amid a strong rally in Pakistan’s equity market, with rising retail participation encouraging companies to return to capital markets.

The benchmark KSE-100 Index has climbed more than 61% over the past year, marking one of the strongest performances in Asia.
Higher valuations have created favorable conditions for issuers seeking to tap investors.

Ahead of the IPO, Sitara raised PKR 1.66 billion in a pre-IPO placement at a 10% premium to the floor price which includes institutional investors like Bank Alfalah Ltd and Lucky Investments.

The shares are being offered at a forward price-to-earnings ratio of 5.2 times, which Habib described to Nukta as a “significant discount” compared with the average valuation of Pakistan’s oil marketing sector of 8.52x.

Founded in 2012, Sitara Petroleum has a strategic affiliation with Gas & Oil Pakistan Ltd. (GO), the country’s second-largest fuel retailer by volume and backed by Saudi Aramco. Sitara is the largest dealer of GO by volume and currently operates 61 fuel stations, primarily in Punjab, under the GO and Aramco brands.

The company also manages a fleet of 320 oil tankers.

Proceeds from the IPO will be used to develop a 30,000-ton oil storage terminal in Gatti, Faisalabad, positioning the company to apply for an oil marketing license by fiscal year 2028.

Sitara also plans to add at least 47 new fuel stations and acquire 50 additional tankers to expand its logistics operations