KSC - Q No 1: How and why Fatima Fertilizer used...

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Q No 1: How and why Fatima Fertilizer used 'Book-building approach for IPO" discusses the details of IPO and private placement options used by Fatima Fertilizer? ANS: As we know that Fatima fertilizer is new company in fertilizer sector of Pakistan by Arif Habib group, the book building is used by Fatima fertilizer to determine the price of the Shares and also to determine the demand in market for the shares. Because it becomes difficult to determine the price of the share and also determine the demand for the shares. So the book building approach was used by Fatima fertilizers. But the range was specified for the per share price. The book building process was for three days. The bid price per share was PKR 10 minimum. And the fair value was 14.5. Fatima fertilizer has issued total of 200 million shares which is 10% of total paid up capital, in that 200 million 150 million are issued through private placement (wealthy individual investors and corporations) and 50 million to general public( every one can participate in it). As 150 million shares are offered to institutional and wealthy investor’s by book building and minimum amount for book building by investors are 1,000,000 and remaining 50 million are offered to general public at the price determine by book building or below. The price share range was PRK 10 to PRK 11 per share. Out of 50 million in offer to general public the 2.5 million are offered to employees of the Fatima fertilizer. And 7.5 million out of 150 million to the employees of Fatima fertilizer. Q No 2: Discuss in detail the characteristics of three mutual funds of a single investment company (for example, AKD is an investment company and has more than 4 mutual funds) ANS: Arif Habib investment management Ltd: a) Pakistan stock market fund b) Pakistan income fund c) Pakistan capital market fund Characteristics A. Pakistan stock market fund: It is one of the open end mutual fund by Arif Habib Group. These mutual funds have invested its all funds 70% in heavily treaded stocks and remaining 30% are invested in not actively traded stocks. This fund is started on 11 th march, 2002. It in an open end mutual fund by Arif Habib group. The starting per unit price was PKR 50. Any one who wants to invest in that fund must have to deposit the minimum amount which is PKR 5000.
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Management fee is 2% per annum front-end loaded (collected at the start of the year). Following are the detail of the all assets. Cash assets 2.4 % of total assets Investment in Equity securities 86.9% of total assets. Investment in Money market securities 9.9% of total assets. Investment in T-bills 4.5% of total assets Other assets net of liabilities (borrowed) -3.7% of total assets B. Pakistan income fund: It is also an open end mutual fund by Arif Habib Group. This fund gives relatively high fixed income. Because it is investing mostly in money
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This note was uploaded on 03/07/2012 for the course FINANCE 236 taught by Professor Hameed during the Spring '12 term at IMSciences.

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KSC - Q No 1: How and why Fatima Fertilizer used...

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