Pakistani group InfoTech will be listed on PSX in Q3’22; plans to raise 2 billion rupees from IPO
LAHOR: InfoTech Group, one of Pakistan’s oldest tech companies, plans to raise Rs 2 billion through an Initial Public Offering (IPO) on the Pakistan Stock Exchange (PSX), scheduled for Q3 2022 to recalibrate the company towards a product-oriented approach. model instead of the current focus on services.
Ahead of the listing on the PSX, some restructuring is also on the agenda with InfoTech Group setting up a company to launch FinTech (FinTech) operations that include launching an Automated Clearing House (ACH) for digitize check clearing and electronic payment gateway under a Payment Service Operator (PSO) / Payment Service Provider (PSP) License from the State Bank of Pakistan (SBP).
InfoTech also says the new company will increase its investment on its own and not make the list on the PSX.
Founded in 1995, InfoTech provides technology products and services to banking, government, capital markets, oil and gas, retail, telecommunications and utilities. The company’s activities currently include systems integration where it works with technology partners like IBM, Microsoft and Oracle to develop technology solutions for customers, for whom its primary focus is to serve the industry. banking and financial services (BFSI).
The other focus of the company is public sector automation where it digitizes government processes. In an interview, the company said it recently won a digital transformation project with the government of Somalia to digitize the African country’s customs system, which is expected to go live in the first quarter of 2022.
InfoTech is also involved in consultancy work and provides its locally developed technology platforms to various sectors.
Why does InfoTech want to go public?
“We plan to launch our IPO in the third quarter of calendar year 2022, after our books close for the current year in June 2022,” said Haris Naseer, COO at InfoTech. Profit in an interview.
InfoTech’s plan to go public comes as Covid-19 offers more opportunities for tech companies in Pakistan, as well as the risk that software companies increasingly lose on cost arbitrage as a Growing number of low cost engineers in Pakistan are now choosing to work with startups or freelance.
As more people choose to work as a freelancer, which is well paid, base salaries have increased at software companies that now have to pay more for engineering talent, increasing costs that may soon return. Pakistani software companies uncompetitive in the future.
“The HR talent pool is already tight in Pakistan, and the increase in costs has had a cumulative effect: When tech companies hire new people, they have to match who they are or can potentially earn by working in. independent. So we are also very quickly losing the cost trade-off that Pakistan had of having low-cost resources, ”Haris said.
Haris said Profit that as part of a service-based business model for a technology company, it therefore becomes difficult to scale as these costs increase. While less resources will be needed to scale a product-based business.
“Hypothetically speaking, if InfoTech provides services worth $ 5 million and needs to increase it to $ 10 million, the resources should also be doubled. But if a technology product is to be scaled from $ 5 million to $ 10 million, only 5-10% more resources would be needed to reach that scale, as growth is gradual, “said the director.
Therefore, for InfoTech, the increase in the target of 2 billion rupees would also be rolled out to improve the product side of the company, followed by a further expansion of the international presence on the back of a business model and primarily product-based advice. “We have already been working in Africa and the Middle East since 2008, but we really want to inject money and have a good sales tool to work on increasing our range of products for the international market”, he declared.
Automated clearinghouse and electronic payment gateway
Before InfoTech was listed on the Pakistan Stock Exchange, it plans to raise funds to launch ACH and payment services under a PSO / PSP license from SBP. InfoTech received approval in principle for the PSO / PSP license in August 2016, but has not yet been able to launch operations.
Haris said the delay was due to their main focus on getting the ACH service in place first, which lacked regulations, for example on the side of electronic check clearing and truncation. He added that the delay was due to InfoTech moving into this business using its own cash. Therefore, progress in this regard depended on the company’s internal cash flow conditions.
To speed things up, InfoTech is now raising new funds from foreign investors and once the funds are raised Haris says that a spin-off company would be formed outside of InfoTech which will handle FinTech operations and will not be part of. registration on the PSX.
“Right now the cleaning process is very cumbersome because everything is manual,” says Haris. “A customer gives a check that goes to the bank branch, then goes to an ACH service provider who clears it, and then it goes to the recipient’s account. The process takes a few days when ideally it should take place in a few moments, ”he adds.
Haris says the clearing process in their FinTech operations will be real-time, which will make it more transparent and efficient.
“We are in talks with a few investors to invest in our payments initiative and then move it forward,” Haris said. “It’s an extremely cash-intensive business, especially in terms of customer acquisition and marketing needs around payments,” he adds.
Haris says the company is technologically ready for launch with integrations in place with 1Link to send and receive money, but wants to wait until funds have been raised, which will give the company a marketing lead. some months.
“The timing of the launch depends on when we can raise funds. Tentatively, funds would be raised in the first or second quarter of next year. As soon as we are able to raise the funds, we just need to set up the relevant GTM (go-to-market) teams and probably a launch horizon of 3 to 4 months after that, ”explains Haris.