Pakistan Agriculture News, Rice

Matco Foods to invest IPO funds in rice glucose plant

KARACHI: Matco Foods Limited, one of the leading basmati rice exporters in Pakistan, has said the money it raised through an initial public offering (IPO) will be mostly used for expansion of its high-margin business to allow the company to generate more profit in coming years.

The company was formally listed at the Pakistan Stock Exchange (PSX) on Tuesday and its shares were available for trade among retail investors.

On the first trading day, 2.49 million shares of the company were traded and its stock price closed at Rs27.30, up 5% from Rs26. Company management expects the stock price to touch Rs50 in a year because it is now moving towards the high-margin business.

“We are confident that our focus on high-margin products will give us better returns compared to our traditional rice exports,” Matco Foods Director Finance Faizan Ali Ghori told media at a press conference. He said the expansion is expected to be completed by March 2019.

Separately talking to The Express Tribune, Ghori said the company was already using Chinese technology for value-added rice products and it would again adopt Chinese technology for expanding operations of its rice glucose and rice protein plant.

The company recently raised Rs757 million with a total issue of 29,143,000 ordinary shares at the strike price of Rs26 per share.

The rice exporter wants to use net proceeds from the public offering for the expansion of the rice glucose and rice protein plant. The expansion will take current capacity of 10,000 tons of rice glucose to 30,000 tons while the rice protein capacity of 1,000 tons will rise to 3,000 tons.

Since rice glucose is not extracted from genetically modified (GM) food, it has huge demand in industrialised countries where health-conscious consumers prefer it over glucose that is extracted from GM food.

Currently, Matco exports 75% of its rice glucose production to international markets where it is priced at around $11,000 per ton against a price range of just $400-500 per ton in the domestic market.

“We feel huge responsibility towards our shareholders who have trusted us in the IPO,” Matco Foods Chairman Jawed Ali Ghori said. “We will utilise this money in the best possible way because of our rich experience in the rice business.”

Matco has been engaged in the rice export business for over 50 years and ships different products to over 60 countries.

It has recently diversified its operations and is now producing rice glucose and rice protein that are mostly used in pharmaceutical, confectionery, juice and other such finished food products.