SE Fruits IPO: Will Underwriters Have to Pick Up the Retail Gap?

Over a week after subscriptions closed for SE Fruits and Vegetable Limited (SEFL), Mettis Global notes that the company has not disclosed how much of its retail portion was taken up. Allotment was due by Tuesday, October 6, yet no retail figure has appeared, even though the book-building leg was publicised quickly. That leg priced at Rs40, the floor, and drew Rs1,429 million of demand for Rs900 million on offer.

Under the PSX Rule Book, the issuer had three working days after closing to report subscription figures, then five working days to allot shares, make refunds and credit CDS accounts. The prospectus confirms that the retail tranche carries full underwriting, with Topline Securities and Growth Securities each committing 2,625,000 shares and Dawood Equities 2,250,000, so unsold shares would fall to them. Each underwriter collects 1% of its committed amount, plus a further 1% on any shares it ends up holding.

Mettis Global also flags a prospectus line on proportionate allotment to book-building bidders, which it sees as a remnant of an earlier format. The document has no default clause for an underwriter that fails to perform, and the Rule Book disciplines the listed company rather than underwriters. The publisher argues that one line confirming the retail result would settle how many shares applicants receive and when the stock lists.