Prospectus Next Capital IPO.pdf

7/30/2019 Prospectus Next Capital IPO.pdf

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ADVICE FOR GENERAL PUBLICTHE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS,

ESPECIALLY THE RISK FACTORS GIVEN AT PARA 5.6, BEFORE MAKING ANY INVESTMENT DECISION

SUBMISSION OF F ICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON)IS PROHIBITED AND

SUCH APPLICATIONSMONEY IS LIABLE TO CONFISCATION UNDER SECTION 1 8A OF THE SECURITIES AND EXCHANGE ORDINANCE

1969.

ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NET WORTH INDIVIDUAL INVESTORS ASINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF REVISION OF BID .IF AN

INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION.

THEBOOK BUILDING PORTION COMPRISINGOF 7,500,000 ORDINARY SHARES HAS BEEN SUCCESSFULLY CLOSED.

THEPRESENTISSUEOF 2,500,000 ORDINARY SHARES WITH AN ADDITIONAL 2,500,000ORDINARY SHARES

UNDERGREEN SHOE OPTION ISBEINGMADETOTHEGENERAL PUBLIC ATAPRICEOF PKR 10/- PERORDINARY

SHARE(I.E.STRIKE PRICEDETERMINEDTHROUGHTHEBOOK BUILDING)

PROSPECTUS

FOR ISSUE OF 10MILLION ORDINARY SHARES (50% OF THE ENHANCED PAID UP CAPITAL) OF FACE VALUE OF PKR

10EACH

BOOK BUILDING PORTION OF THE ISSUE COMPRISES OF 7.5MILLION ORDINARY SHARES (75% OF THE TOTAL

ISSUE) AT A FLOOR PRICE OF PKR10PER SHARE

GENERAL PUBLIC PORTION OF THE ISSUE COMPRISES OF 2.5 MILLION ORDINARY SHARES (25% OF THE TOTAL ISSUE)

WITH AN ADDITIONAL GREEN SHOE OPTION OF UP TO 2.5 MILLION ORDINARY SHARES AT THE STRIKE PRICE OF PKR

10PER SHARE DETERMINED THROUGH THE BOOK BUILDING PROCESS

BIDDING PERIOD:21 TO 22FEBRUARY 2012(BOTH DAYS INCLUSIVE)

(FROM 9:00 A.M. TO 5:00 P.M.)

DATE OF PUBLIC SUBSCRIPTION:20 TO 21 MARCH 2012(BOTH DAYS INCLUSIVE)

DURING BANKING HOURS

LEAD MANAGER BOOK RUNNER

BOOK BUILDING PORTION UNDERWRITTEN BY: GENERAL PUBLIC PORTION UNDERWRITTEN BY:

Silkbank Limited

Pak Oman Investment Company Limited

Pak Brunei Investment Company Limited

THE DATE OF PUBLICATION OF THIS PROSPECTUS:12MARCH,2012

NEXT CAPITAL LIMITED


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Book Runner Lead Manager

Initial Public Offering of Next Capital Limited

1

Statement on Issuers absolute responsibility:

The Issuer, having made all reasonable inquiries, accepts responsibility for the disclosures made in this

Prospectus and confirms that:

this Prospectus contains all information with regard to the Issuer and the Issue, which is materialin the context of the Issue and nothing has been concealed;

the information contained in the Prospectus is true and correct to the best of our knowledge andbelief;

the opinions and intentions expressed herein are honestly held; and there are no other facts, the omission of which makes this document as a whole or any part

thereof misleading.

S/d

________________Najam AliChief Executive Officer


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TABLE OFCONTENTS

1. APPROVALS AND LISTING ON THE STOCK EXCHANGE................................................................................... 6

2. BOOK BUILDING PROCEDURES................................................................................................................ 8

3. SHARE CAPITAL AND RELATED MATTERS ................................................................................................ 23

4. UNDERWRITING,COMMISSIONS,BROKERAGE AND OTHER EXPENSES ......................................................... 32

5. HISTORY AND PROSPECTS.................................................................................................................... 34

6. FINANCIAL INFORMATION.................................................................................................................... 42

7. MANAGEMENT.................................................................................................................................. 50

8. MISCELLANEOUS INFORMATION............................................................................................................ 579. APPLICATION AND ALLOTMENT INSTRUCTIONS......................................................................................... 63

10. BIDDING FORM OF NEXT CAPITAL LIMITED ............................................................................................. 67

11. SIGNATORIES TO THE PROSPECTUS ........................................................................................................ 68

12. MEMORANDUM OF ASSOCIATION......................................................................................................... 69


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DEFINITIONS

Application Money In case of bidding for shares out of the book building portion, the total amount

of money payable by a successful bidder which is equivalent to the product of

the strike price and the number of shares to be allotted.

AND

In case of application for subscription of shares out of the general public

portion, the amount of money paid along with application for subscription of

shares which is equivalent to the product of the offer price and the number of

shares applied for.

AAH ABA ALI HABIB Securities (Pvt.) Limited

AKD Trade Aqeel Karim Dhedhi Trade

Bid An indication to make an offer during the bidding period by a bidder to

subscribe to the Ordinary Shares of Next Capital Limited at or above the floor

price, including all the revisions thereto.

Bidder Any eligible prospective investor who makes a bid pursuant to the terms of the

Preliminary Prospectus and the Bidding Form.

Bid Amount The total amount of the bid which is equivalent to the product of the bid price

and the number of shares bid for.

Bid Collection Centre Pre-determined locations where applications for bidding of shares are collected

by the Book Runner (BR) on behalf of the Issuer including the offices of

Corporate Brokerage Houses, Scheduled Banks, Development Financial

Institutions and Investment Finance Companies, subject to appointment of

these institutions as agents by the Book Runner through an agreement in

writing for the purpose, with consent of the Issuer.

Bidding Form The form prepared by the Issuer on the format mentioned in the Listing

Regulations of the Exchange for the purpose of making bids which will be

considered as the application for subscription of Ordinary Shares out of the

book building portion.

Bidding Period The period during which bids for shares of the Company will be made by

Institutional Investors and HNWIs. The Bidding Period commences on 21-02-

2012 and ends on 22-02-2012 (daily from 9:00 a.m. to 5:00 p.m.)

Bidding Process Ending Date The date after which BR will not accept any bids for the book building portion of

the Issue.


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Bidding Process Starting Date The date on which BR shall start accepting bids for the book building portion of

the Issue.

Book Building A mechanism of price determination through which indication of interest for

subscription of shares issued by the Company is collected from InstitutionalInvestors and HNWIs. Through this process a book is built which gives an idea of

demand for the shares at different price levels. The strike price is determined

based on the price at which demand for shares at the end of book building

period is sufficient to raise the required amount.

Book Building Account An account opened by the Company with the Collection Bank(s). The bidder will

pay the margin money/bid amount through demand draft, pay order or cheque

in favor of this account and the balance of the application money, if any, shall

be paid through this account after successful allocation of shares.

Book Runner (BR) ABA ALI HABIB Securities (Pvt.) Limited

Collection Bank A bank authorized by the issuer for the deposit of bid money

CDCPL Central Depository Company of Pakistan Limited

CF & A Corporate Finance & Advisory

ECLTRADE Eastern Capital Limited Trade

Floor Price The minimum price set by the Company for issuance of shares which is PKR 10

per share. A bid placed below the floor price will not be entertained by the

Book Runners.

FYSLTRADE Fawad Yusuf Securities Trade

General Public All individual and institutional investors including both Pakistani (residents &

non-residents) and foreign investors.

General Public Issue Price The price at which ordinary shares are issued to general public. This price can

be at or below the strike price.

High Net worth Individual

(HNWI)

Individual investor who applies or bids for shares of the value of PKR

1,000,000/- or above in the book building process.

Institutional Investors Both local and foreign institutional investors.

Investment Finance Company An investment finance company as defined in the Non-Banking Finance

Companies and Notified Entities Regulations, 2008.

Issue IPO of 10,000,000 Ordinary Shares by Next Capital Limited with a floor price of

PKR 10/- per share. The Issue constitutes 50% of the post-IPO paid-up capital of


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the Company.

Portion of Institutional Investors/HNWI (through book building): 7,500,000

Ordinary Shares - 75% of the total Issue size.

Portion of General Public: 2,500,000 Ordinary Shares - 25% of the total Issue

size, with an additional 2,500,000 ordinary shares as Green Shoe Option.

(For details please see Para 2.1)

Lead Manager (LM) Arif Habib Limited (AHL)

Limit Price The maximum price a prospective institutional investor or HNWI is willing to

pay for a share under the Book Building process.

Margin Money The partial or total amount, as the case may be, paid by a bidder at the time ofmaking a bid.

NCL Next Capital Limited

Ordinance The Companies Ordinance, 1984

Ordinary Shares Ordinary Shares of Next Capital Limited having face value of PKR 10 each unless

otherwise specified in the context thereof.

Preliminary Prospectus The preliminary prospectus containing all the information and disclosures as

required under the Companies Ordinance 1984, and the Listing Regulations ofthe Karachi Stock Exchange approved by the Commission under section 57 of

the Companies Ordinance 1984 and circulated to the Institutional Investors and

HNWIs for bidding of shares out of book building portion through the Book

Building Process.

Strike Order A bid for a specified number of shares at the strike price to be determined

through the Book Building process.

Step bid A series of limit bids at increasing prices.

Strike price The price of share determined/discovered on the basis of the Book Building

process in the manner provided in the Listing Regulations of Karachi Stock

Exchange at which the shares are issued to successful bidders. The Strike Price

determined through the Book Building process is PKR 10 per share.


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PART 1

APPROVALS AND LISTING ON THE STOCK EXCHANGE1.1 APPROVAL OF THE SECURITIES &EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (the SECP or the Commission) as

required under Section 57(1) of the Companies Ordinance, 1984 (the Ordinance) has been obtained by

Next Capital Limited (the Company) for the issuance, circulation and publication of this Prospectus.

DISCLAIMER:

It must be distinctly understood that in giving this approval, SECP does not take any responsibility for the

financial soundness of the Company and any of its schemes stated herein or for the correctness of any of

the statements made or opinions expressed with regards to them by the Company in this Prospectus.

SECP has not evaluated quality of the issue and its approval for issue, circulation and publication of the

Prospectus should not be construed as any commitment of the same. The public/investors should

conduct their own independent due diligence and analysis regarding the quality of the issue before

bidding/ subscribing.

1.2 CLEARANCE OF PROSPECTUS BY THE KARACHI STOCK EXCHANGE (GUARANTEE)LIMITEDThis Prospectus of the company has been cleared by the Karachi Stock Exchange (Guarantee) Limited in

accordance with the requirements under its Listing Regulations.

DISCLAIMER:

The KSE has not evaluated the quality of the issue and its clearance should not be construed as anycommitment of the same. The public / investors should conduct their own independent investigation

and analysis regarding the quality of the issuer before subscribing.

The publication of this document does not represent solicitation by the Karachi Stock Exchange. The contents of this document does not constitute an invitation to invest in shares or subscribe for

any securities or other financial instrument by the Karachi Stock Exchange, nor should it or any part of

it form the basis of, or be relied upon in any connection with any contract or commitment

whatsoever of the Exchange.

It is clarified that information in this Prospectus should not be construed as advice on any particularmatter by the Karachi Stock Exchange and must not be treated as a substitute for specific advice.

The Karachi Stock Exchange disclaims any liability whatsoever for any loss however arising from or inreliance upon this document to any one, arising from any reason, including, but not limited to,

inaccuracies, incompleteness and/or mistakes, for decisions and/or actions taken, based on this

document.

The Karachi Stock Exchange neither takes responsibility for the correctness of contents of thisdocument nor the ability of the Company to fulfill its obligations there under.


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Advice from a suitably qualified professional should always be sought by investors in relation to anyparticular investment.

1.3 FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIESThe Company has filed with the Registrar, Companies Registration Office Karachi, as required under

Section 57(3) and (4) of the Companies Ordinance 1984, a copy of this Prospectus signed by all the

Directors of the Company on behalf of the Company, along with the following documents attached

hereto:

a) Letter No. KA-ZQ-500 dated 7th October, 2011, from Auditors of the Company, KPMG Taseer Hadi& Co., Chartered Accountants, consenting to the publication of their names in the Document,

which contains in Part 6 certain statements and reports issued by them as experts (which consent

has not been withdrawn), as required under Section 57(5) of the Companies Ordinance, 1984.

b) Copies of Material Contracts and Agreements mentioned in Part 8 of this Document as requiredunder Section 57(4) of the Ordinance.

c) Written confirmations of the Legal Advisor to this Issue and Bankers to this Issue, mentioned inthis Prospectus consenting to act in their respective capacities, as required under Section 57(5) of

the Companies Ordinance, 1984.

d) Written consents of the Directors, the Chief Executive and the Company Secretary of theCompany who have consented to be named in their respective capacities in this Prospectus, as

required under Section 57(3) of the Ordinance, read with sub-clause (1) of clause (4) of Section 1

of Part 1 of the Second Schedule to the Ordinance.

1.4 LISTING AT THE KARACHI STOCK EXCHANGEAn Application has been made to the KSE for permission to deal in and for quotation of the shares of the

Company.

If for any reason, the application for formal listing is not accepted by the KSE, the Company undertakes to

publish immediately in the press a notice to that effect and thereafter to refund the application money to

the applicants in pursuance of the Prospectus as required by the provisions of Section 72 of the Ordinance.

1.5 CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE ISSUEROn behalf of the Company, we certify that the prospectus constitutes a full, true and plain disclosure of all

material facts relating to the shares being issued through the prospectus.

For and on behalf of Next Capital Limited,

Sd/- Sd/-

__________________ __________________

Najam Ali Zubair Ellahi

Chief Executive Officer Chief Financial Officer


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PART 2

BOOK BUILDING PROCEDURES2.1 BRIEF STRUCTURE OF THE ISSUE

The Present Issue

Next Capital Limited (hereinafter referred as the Company), is issuing 10,000,000 Ordinary Shares of PKR

10 per share aggregating to PKR 100.0 million (the Issue). The Issue constitutes 50% of the post IPO paid-

up capital of the Company.

The Issue is being made through the Book Building process with a floor price of PKR 10/- per share,

whereby 75% of the total Issue size i.e. 7,500,000 Ordinary Shares of PKR 10 each will be issued through

the book building process to Institutional Investors and High Net Worth Individuals (HNWI).The general

public portion of the Issue comprises of 2.5 million ordinary shares (25% of the total Issue) with an

additional green shoe option of up to 2.5 million ordinary shares at the Strike Price Determined

through the Book Building Process.

2.2 BOOK BUILDING PROCEDUREBook building is a process whereby investors bid for a specific number of shares at various prices. The LM

& BR, with the consent of Issuer, sets a floor price which is the lowest price an investor can bid at. An

order book of bids from investors is maintained by the BR, which is then used to determine the strike price

through the Dutch Auction Method.

Under the Dutch Auction Method, the strike price is determined by lowering the price to the extent thatthe total number of shares that the issuer intends to issue through the Book Building process are fully

subscribed. However, while determining the strike price the bids placed through strike order shall not be

taken into consideration.

A bid by a potential investor can be a Limit Bid, Strike Bid or a Step Bid, which are explained below.

Limit Bid: Limit bid is at the limit price, which is the maximum price an investor is willing to pay for aspecified number of shares.

In such a case a bidder explicitly states a price at which he/she/it is willing to subscribe to a specific

number of shares. For instance, a bidder may bid for 2 million shares at PkR 15 per share. Since the

bidder has placed a limit price of PkR 15 per share, this indicates that he/she/it is willing to subscribe

at or below PkR 15 per share.

Strike Order: A bid for a specified number of shares at the strike price to be determined through theBook Building Process.

In strike order the bidder explicitly states the number of shares he/she/it is willing to subscribe at the

Strike Price. For instance, a bidder may bid for 2.0 million shares at the strike price to be determined

through the Book Building Process.


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Step Bid: A series of limit bids at increasing prices. The aggregated amount of step bid shall not be lessthan 1,000,000/- and the amount of any step shall not be less than 250,000/-.

Under this bidding strategy, bidders place a number of limit bids at different price levels. The bidders

may, for instance, make a bid for 2.0 million shares at PkR13 per share, 1.5 million shares at PkR14 pershare and 1.0 million shares at PkR15 per share.

A SINGLE INVESTOR SHALL NOT MAKE MORE THAN ONE BIDS, HOWEVER, A BID CAN BE REVISED

THE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID APPLICATION WHICH IS FULLY OR

PARTIALLY BENEFICIALLY OWNED BY PERSONS OTHER THAN THE ONE NAMED THERIN IS TO BE

CONSIDERED AS CONSOLIDATED BIDS.

Once the bid period is over and book has been built, the BR shall determine the strike price.

Successful bidders shall be intimated, within two (2) working days of the closing of the bidding period, the

strike price and the number of shares provisionally allotted to each of them. The successful institutionalbidders shall, within seven (7) working days of the closing of the bidding period, deposit the balance

amount as consideration against allotment of shares. Where a successful bidder defaults in payment of

shares allotted to him, the margin money deposited by such bidder shall be forfeited to the Book

Runner under clause 8.11 of Appendix 4 of the Listing Regulations of KSE.

AS PER REGULATION 8.16 OF THE KSE LISTING REGULATIONS, THE SUCCESSFUL BIDDERS SHALL BE

ISSUED SHARES IN THE FORM OF BOOKENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL

THE INSTITUTIONAL AND HNWI INVESTORS SHALL, THEREFORE, PROVIDE THEIR CDC ACCOUNT

NUMBERS IN THE BID APPLICATION.

2.3 LEAD MANAGERArif Habib Limited has been mandated by the Company to act as a Lead Manager to this Issue, which is

being made through the Book Building Process as laid out in Appendix 4 of the Listing Regulations of the

KSE.

Arif Habib Limited (AHL) is ranked among the premium brokerage houses in Pakistan and its Corporate

Finance team is among the most active in carrying out financial advisory services in Pakistans capital

markets.

Since 2006, as part of its business expansion strategy, AHL has further strengthened its corporate finance

function to offer a fuller range of financial services to clients.

Its expertise and strong delivery capacity act as catalysts in achieving the most value-additive investment

solutions for clients. The spread of AHLs corporate finance services includes public and private offerings of

debt and equity securities, valuation, risk underwriting, restructurings, syndication, securitization, tender

offerings and Sharia-compatible instruments.

The AHL corporate finance team comprises four qualified and well-experienced professionals with a sound

project management and advisory record.


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2.4 BOOK RUNNERABA ALI HABIB Securities (Pvt.) Limited (AAH) has been mandated by Next Capital Limited to act as

Book Runner to the transaction.

AAH is a securities brokerage house at the Karachi Stock Exchange (G) Limited formed in the year 1969. It

is principally engaged in the business of equity brokerage, portfolio management, financial consultancy,

investment advisory and securities research.

The company has a team of professional managers with the expertise to explore progressive avenues to

expand the brokerage operations of the company, better serving its valued clients. To enhance its

professional services, the company possesses state of art computer and communication equipments and

clean environment, conducive to efficient performance.

2.5 ROLE AND FUNCTION OF LEAD MANAGER AND BOOK RUNNERThe Lead Manager and Book Runner to the Issue ensure that:

i. all disclosures as required under the Companies Ordinance, 1984 and the Appendix 4 of the ListingRegulations of the Karachi Stock Exchange have been made in the Prospectus;

ii. necessary infrastructure and electronic system/software is available to collect bids and to carry outthe Book Building process in a fair, efficient and transparent manner;

iii. it has obtained on behalf of the Company, all approvals/consents/NOCs relating to the Issue;iv. the preliminary Prospectus will, after approval of the Commission, be uploaded on its own as well

as on the Companys website; and

v. it has established bid collection centers at the following addressesKarachi

Mr. Waqar Ahmed

Room# 419, Stock Exchange Building

I. I. Chundrigar Road, Karachi.Tel: +9221 32429664-67

Fax: +9221 32413822

Email: [email protected]

Lahore

Attn: Mr. Zulqarnain Mahmood KhanRoom No. 416, 4th Floor

Siddiq Trade Centre

72 Main Boulevard Gulberg

Lahore.

Tel: +9242-35781940-41Fax: +9242-35781942

Email: [email protected]

Islamabad

Attn: Ms. Sidra Khalid


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Attn: Mr. Asif Raza

Summit Bank Limited

F-6, Super Market

Islamabad.

Phone: +9251-2279168-70 Ext 228+9251-2279168-70 Ext 222

Fax: +9251-2279166

Email: [email protected]@summitbank.com.pk

The Lead Manager and Book Runner to the Issue shall:

i. conduct awareness campaigns through presentations, meetings, road shows etc;ii. collect bid applications and applications money, security, margin as the case may be from the

Institutional Investors and HNWI in the manner as mentioned in the Appendix 4 of the Listing

Regulations of the Karachi Stock Exchange.

iii. put serial number, date and time on each bidding form at the time of collection of the same fromthe bidders;

iv. vet the bidding applications;v. ensure that each bid application contains depository account number of the bidder maintained

with CDCPL wherein shares shall be credited in case the bid is successful.

vi. not accept multiple bids i.e more than one bid application by same person;vii. build an order book showing demand for the shares at various prices;viii. discover the strike price at the close of the bidding period;

ix. the Book Runner enter into underwriting agreement with the issuer;x. maintain record of the bids received for subscription of the shares;xi. circulate copies of the preliminary Prospectus and bidding form cleared by the Exchange and

approved by the Commission to the prospective Institutional Investor and HNWI;

xii. publish an advertisement, approved by the Commission, in at least one Urdu and one English dailyNewspaper having wide circulation in the Federal and all the provincial capitals, to invite the

Institutional investor and HNWI to participate in the bidding process;

xiii. use the software for Book Building process provided by the Exchange, which is based on DutchAuction Methodology for display of the order book and determination of the strike price, on theterms and conditions as may be agreed in writing between the Exchange and the Book Runner;

xiv. for information of the investors, in addition to live display of the order book on the website of theExchange, also live display the same order book simultaneously on its own website till closing of the

bidding period; and

xv. Ensure that all the bids received by the bid collection centers are entered into the systemdeveloped by the Exchange for the purpose of Book Building. Book Runner shall not accept and

Enter any bid after 5:00 p.m. during the days of the bidding period, except the last day when no

fresh bid(s) shall be collected after 5:00 p.m. and the bid(s) collected thus far, shall be entered

into the system till 7:00 p.m. on the same day and thereafter no bid shall be entered into the


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system or be revised in any way and for any reason even if the bid application have been

received from the investor.

2.6 OPENING AND CLOSING OF THE BIDDING PERIODThe bidding period shall remain open for 2 working days commencing from the business hours at 9.00 a.m.

on 21 February 2012 and will close at 5.00 p.m. on 22 February 2012 at the close of the business hours.

Bidding Period Starts on 21 February 2012

Bidding Period Ends on 22 February 2012

*(Both Days Inclusive)

2.7 ELIGIBILITY TO PARTICIPATE IN BIDDINGEligible investors who can place their bids in the Book Building process are Institutional Investors and

HNWIs.

Institutional Investors include both local and foreign institutional investors HNWI investors are individual investors who bid for shares of the value of not less that PKR

1,000,000/- (Pak Rupees One Million) in the Book Building process.

2.8 INFORMATION FOR BIDDERS Preliminary Prospectus for Issuance of Shares has been duly cleared by the Karachi Stock Exchange and

approved by SECP;

The Preliminary Prospectus for Issuance of Shares and the bidding form can be obtained from theRegistered Office of Next Capital Limited, AHL and the bid collection centers. Preliminary Prospectus

can be found at the website of BR and the Company;

Eligible investors who are interested in subscribing to the Ordinary Shares should approach LM & BR atthe addresses provided in para 2.4 to register their Bids;

THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR THROUGHFAX AT NUMBER: (Karachi) +92-21-32413822, (Lahore) +92-42-35781942, (Islamabad) +92-51-

2279166.

2.9 BIDDING FORM AND PROCEDURE FOR BIDDINGStandardized bidding form has been prescribed by the BR. Bids shall be submitted at the bid collection

centers in person or through fax (Karachi) +92-21-32413822, (Lahore) +92-42-35781942, (Islamabad) +92-

51- 2279166, on the standard bidding form duly filled in and signed in duplicate. The bidding form shall be

serially numbered at the bid collection centers and date and time stamped, at the time of collection of the

same from the bidders.

Upon completion and submission of the bidding form, the investors are deemed to have authorized the

Company to make necessary changes in the preliminary Prospectus for Issuance of shares as would be

required for filing the final Prospectus with the Stock Exchange and SECP, without prior or subsequent

notice of such changes to the investor.


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The bidding procedure under the Book Building Process is outlined below:

i. Copy of approved preliminary Prospectus shall be circulated by the Company through LM & BR toprospective investors and a copy will also be placed on websites of the Company and AHL.

ii. An advertisement, approved by the Commission, shall be published at least in one Urdu and one Englishdaily Newspaper having wide circulation in the Federal and all the Provincial capitals, inviting the

institutional investors and HNWI to participate in the bidding.

iii. A Book Building Account shall be opened by the Company for collection of bid amount.iv. The bidding form shall be issued in duplicate signed by the bidder and countersigned by the BR, with

first copy for BR, and the second copy for the bidder.

v. Bids shall be submitted through the bid collection centers or through facsimile (Karachi) +92-21-32413822, (Lahore) +92-42-35781942, (Islamabad) +92-51-2279166 on the standard bidding form duly

filled in and signed in duplicate. The addresses for the bid collection centers are given in para 2.4.

vi. Bids can be placed at limit price, strike order or step bid.vii. Bids/margin money shall be deposited through demand draft/pay order/cheque in favor of Initial

Public Offering of Next Capital Limited Book Building Account.

viii. BR shall collect an amount to the extent of 100% of the application money as bid/margin money inrespect of bids placed by HNWIs.

ix. BR shall collect an amount of not less than 25% of the application money as margin money in respect ofbids placed by institutional investors.

x. BR may reject a bid placed by an institutional investor/HNWI for reasons to be recorded in writing andthe reasons should be disclosed to such bidder forthwith. Decision of BR shall not be challengeable by

the bidder or its associates.

xi. BR shall not accept the bids made at a bid price lower than the Floor Price.xii. The Issuer and BR shall not accept bids from associated persons of the Issuer in excess of five percent

(5%), in aggregate, of the size of the Book Building Portion.

xiii. The bidders will receive back the duplicate form upon submission of their bids which will be proof oftheir bid submission. In case of facsimile, a copy of form with receiving will be faxed back to the bidder.

xiv. Bidders can revise or withdraw their bids during the bidding period (for details please refer Para 2.12and 2.14).

xv. BR shall maintain record of the bids received/ rejected / revised / withdrawn along with identities ofthe bidder and evidence of amount received.

xvi. BR shall ensure that all the bids received by the bid collection centers are entered into the systemdeveloped by the Karachi Stock Exchange for the purpose of book building according to the

procedure given in paragraph 2.4 (b) (xiii) and as per clause 8.6 of Appendix 4 of the Listing

Regulation of KSE. The system shall be capable to display live an order book, in descending order with

respect to the bid price, showing the demand for shares at various prices and accumulative number

of shares bid for along with percentage of the total shares offered. The order book should also show

the revised bids and the bids withdrawn.

xvii. At the close of the bidding period, the BR shall determine the strike price with the consent of theCompany.


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xviii. Successful bidders shall be intimated, within two (2) working day of the closing of the bidding period,the strike price and the number of shares provisionally allotted to each of them.

xix. The successful bidders shall, within seven (7) working days of the closing of the bidding period, depositthe balance amount as consideration against allotment of shares.

xx. Under clause 8.11 of the Appendix 4, where a successful bidder defaults in payment of shares allottedto him, the margin money deposited by such bidder shall be forfeited by the BR.

xxi. Margin money of unsuccessful bidders will be refunded within three (3) working days of the close of thebidding period.

xxii. Final allotment of shares out of the Book Building Offer shall be made after receipt of full subscriptionmoney from the successful bidders; however, shares to such bidders shall be issued at the time of

issuance of shares out of the general public portion of the Issue to successful applicants.

xxiii. An associated person or any other related person or party of the Issuer shall not make bid(s) for sharesin excess of 5% of the book building portion of the Issue.

2.10 BOOK BUILDING AND GENERAL PUBLIC ACCOUNTThe Company has opened two separate bank accounts for collection of applications money, one each for

the Book Building portion and the General Public portion.

The bidders shall draw demand draft/pay order or cheque in favor of Initial Public Offering of Next

Capital Limited Book Building Account which has been opened at Summit Bank Limited. The collection

bank shall keep and maintain the bid money in the said account. Once the strike price is determined and

allottees are finalized, the Lead Manager, after obtaining NOC from KSE, may request in writing to the

collection bank for transfer the money of successful and accepted applications to the Companys

account(s) and advice for refund of the bid money to unsuccessful bidders.

2.11 PAYMENT INTO THE BOOK BUILDING ACCOUNTThe bidders shall draw a demand draft/pay order or cheque favoring Initial Public Offering of Next

Capital Limited Book Building Account and submit it at the designated bid collection center either in

person or through facsimile along with a duly filled in bidding form.

CASH MUST NOT BE SUBMITTED WITH BIDDING FORMS AT THE BID COLLECTION CENTER. ONLY PAY

ORDER, BANK DRAFT, CHEQUE AND ANY OTHER APPROPRIATE INSTRUMENT ACCEPTABLE TO BR AND

DRAWN IN FAVOR OF INITIAL PUBLIC OFFERING OF NEXT CAPITAL LIMITED BOOK BUILDING

ACCOUNT ARE ACCEPTABLE.

Since the investors can bid for shares through limit price, strike order or step bid therefore payment

procedure is explained below for all the three methods.

A.PAYMENT FOR LIMIT BIDS

If investors are placing their bids through limit price then they shall deposit the margin money/bid

amount based on the number of shares they are bidding for at their stated bid price.


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For instance, if an investor is applying for 5.0 million shares at a price of PKR 11 per share, then the total

application money would amount to PKR 55 million. In such a case, (i) HNWI shall deposit PKR 55 million in

the Book Building account as the bid amount which is 100% of PKR 55 million, and (ii) Institutional

Investors shall deposit at least PKR 13.75 million in the Book Building account as the margin money which

is 25% of PKR 55 million.

B.PAYMENT FOR STRIKE ORDERS

IF INVESTORS ARE PLACING A STRIKE ORDER, THEN THEY SHALL DEPOSIT THE MARGIN MONEY/BIDAMOUNT EQUAL TO THE

PRODUCTOFTHE NUMBER OF SHARES THEY ARE BIDDING FOR ANDTHEFLOORPRICEWHICHINTHISCASEIS PKR

10 PER SHARE.

For instance, if the investor is applying for 5.0 million shares then the total application money would be

PKR 50 million. In such a case, (i) HNWI shall deposit PKR 50 million in the Book Building account as bid

amount which is 100% of PKR 50 million and (ii) Institutional Investors shall deposit atleast PKR 12.50million in the Book Building account as the margin money which is 25% of PKR 50 million.

C.PAYMENT FOR STEP BIDS

If investors are placing a step bid, which is a series of limit bids at increasing prices, then they shall

deposit the margin money/bid amount based on the total number of shares they are bidding for at their

stated bid prices.

For instance, if the investor bids for 0.5 million shares at PKR 14 per share, 0.4 million shares at PKR 15 per

share and 0.3 million shares at PKR 16 per share, then in essence the investor has placed one step bid or

three limit bids at increasing prices. The application money would amount to Rs. 17.80 million, which isarrived at by multiplying number of shares with the bid price and aggregating all the three bids. In such a

case, (i) HNWI shall deposit PKR 17.80 million in the Book Building account as bid amount which is 100% of

PKR 17.80 million and (ii) Institutional Investors shall deposit PKR 4.45 million in the Book Building account

as margin money which is at least 25% of PKR 17.80 million.

2.12 PAYMENT BY FOREIGN INVESTORSForeign investors may subscribe using their Special Convertible Rupee Accounts (SCRA), as set out under

Chapter 20 of the State Bank of Pakistans Foreign Exchange Manual.

Payments made by foreign investors shall be supported by proof of receipt of foreign currency through

normal banking channels. Such a proof shall be submitted along with the Bidding Application by the

foreign investors.

2.13 REVISION OF BIDS BY THE BIDDERThe bidders shall have the right to revise their bids any time during the bidding period and on the last day

till 07:00 pm. Online revision of the bids may be allowed to the bidders through system software. This will

however be subject to the condition that the bidder shall comply with the requirements of bidding as


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disclosed under Appendix 4 of the Listing Regulations and any other condition or procedure disclosed in

the Prospectus.

2.14 REJECTION OF BIDS BY BOOK RUNNERIn terms of clause 8.4 of Appendix 4 of the Listing Regulations of the Karachi Stock Exchange, BR may reject

a bid placed by an institutional investor/HNWI for reasons to be recorded in writing and the reasons

should be disclosed to such bidder forthwith. Decision of BR shall not be challengeable by the bidder or its

associates.

2.15 WITHDRAWAL OF BIDS BY THE BIDDERA bidder has the right to withdraw placed bid from the bidding system any time during the bidding period

and on the last day till 05:00 pm. Online withdrawal of the bids may be allowed to the bidders through

system software. This will however be subject to the condition that the bidder shall comply with the

requirements of bidding as disclosed under Appendix 4 of the Listing Regulations and any other conditionor procedure disclosed in the Prospectus.

2.16 WITHDRAWAL OF THE ISSUE BY THE COMPANYa) According to clause 3.10 of appendix 4 of the listing regulations of Karachi stock exchange, in case

the Company does not receive bids at or above the floor price for the minimum number of shares

offered, it may withdraw the Issue. The decision of withdrawal shall be taken within a period not

more than three (3) working days of the closing of bidding period.

b) The Issuer shall withdraw the offer if the total bids received are less than fifteen.c) The withdrawal shall be immediately intimated to the Commission and the Exchange.d) In case the offer is withdrawn, the margin money/bid amount will be refunded to the bidders

within three (03) working days of the decision of withdrawal without any markup, interest etc.

2.17 MECHANISM FOR DETERMINATION OF STRIKE PRICEa) At the close of the bidding period, the Issuer, in consultation with the Book Runner shall

determine the strike price on the basis of Dutch Auction Method. Under this Methodology, the

strike price is determined by lowering the price to the extent that the total number of shares

offered are subscribed. However, while determining the strike price, the bids placed through strikeorder(s) shall not be taken into consideration.

b) The order book shall display the bids tabular form in descending order along with the number ofshares bid for and the cumulative number of shares at each price level. The bids at strike orders

shall, however, be displayed in the order book in the following manner:

i. After the lowest limit bid, in case the limit bids placed are not sufficient for full allotment ofthe shares offered, or,

ii. Immediately, after the limit bid at which all the shares offered can be allotted, in case the limitbids placed are sufficient for full allotment of the shares offered.


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c) For the purpose of allotment of shares, the limit bid(s) entered at the price determined/discoveredas Strike Price through Book Building Process and the bids placed as strike order shall be ranked

equally and preference will be given to the bidder who has made the bid earlier.

Once the strike price is determined all those bidders whose bids have been found successful shall

become entitled for allotment of shares. The bidders, who have made bids at prices above the

strike price, will be issued shares at the strike price and the differential will be refunded. The

bidders, who have made bids below the strike price, shall not qualify for allotment of shares and

their margin money shall be refunded.

The mechanism for determination of strike price can be understood by the following illustration.

Number of shares being offered through the Book Building: 7.5 million Ordinary Shares Floor price: PKR 10.00 per share

Bidding Period: 21 to 22 February 2012

BidderPrice (PKR

per share)

Quantity

(shares in

million)

Cumulative

number of

shares

Category

of orderDate

Institution A 15.00 1.00 1.00 Limit price Day 1

Institution E 14.50 1.50 2.50 Limit price Day 3

Ins titution B 13.75 2.00 3.00 Limit price Day 2

HNWI A 13.00 1.75 4.75 Step bid Day 3

Ins titution C 11.25 2.00 6.75 Step bid Day 1

HNWI B 11.05 0.75 7.50 Limit price Day 2

Institution D X 1.00 8.50 Strike bid Day 2HNWI C X 1.00 9.50 Strike bid Day 3


Ins titution B 10.25 4.00 12.50 Limit price Day 2

HNWI A 10.10 2.75 15.25 Step bid Day 3


Setting Strike Price On the basis of the figures provided in the above illustration, according to the Dutch

Auction Method, the strike price would be set at PKR 11.05 per share to sell the required quantity of 7.5

million ordinary shares.

At PKR 15 per share, investors are willing to buy only 1.00 million shares. Since 6.50 million shares are still

available, therefore the price will set lower.

At Rs. 13.75 per shares, investors are willing to buy 2.00 million shares. Since 4.50 million shares are still

available, therefore, the price will set lower.



Bid withdrawn Strike price determined

through Dutch AuctionMethod

Total shares subscribed Bid has been revised and

placed at PKR 13.75 pershare


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At Rs. 11.05 per shares, investors are willing to buy 0.75 million shares. Since after bidding for 0.75 million

shares at Rs. 11.05 per share no shares will be available, therefore, the strike price will be set at Rs. 11.05

per share for the entire lot of 7.5 million ordinary shares.

The bidders, who have placed bids at prices above the strike price, will be issued shares at the strike priceand the differential would be refunded. Investors, who have bid below PKR 11.05/- per share, do not

qualify for allotment and their money would be refunded.

2.18 BASIS OF ALLOTMENT OF SHARESAfter the closure of bidding period, the BR will analyze the demand generated at various price levels. Only

successful bidders shall be eligible for allotment and issue of shares. Final allotment of shares out of the

Book Building portion shall be made after receipt of full subscription money from the successful bidders;

however, shares to such bidders shall be dispatched or credited, as the case may be, at the time of issue of

shares out of the public portion of the issue to successful applicants.

2.19 REFUND OF MARGIN MONEYInvestors who have bid lower than the strike price are not eligible for allotment of shares. Margin money

of the unsuccessful bidders shall be refunded within three (3) working days of the close of the bidding

period as required under clause 8.12 of Appendix 4 of the KSE Listing Regulations.

2.20 UNDERWRITINGAfter determination of the strike price, BR shall within two (2) working days of the closing of the bidding

period enter into an underwriting agreement with the Company indicating the number of shares that BR

would underwrite at the strike price and the underwriting Commission/Fee to be charged.

2.21 PUBLICATION OF THE FINAL PROSPECTUSThe underwriting agreement for the public portion shall be finalized within ten (10) working days from

closing of the bidding period.

Upon finalization of the underwriting agreements, the LM shall within ten (10) working days from the

closing of the bidding period, shall submit an application to KSE for allocation of dates for publication ofthe final Prospectus and subscription of shares by the general public.

The final Prospectus in full or in abridged form must be published within seventeen (17) working days of

the closing of the bidding period in the manner as specified in Section 53 of the Companies Ordinance,

1984.

Public subscription for the shares shall be held at any date(s) within thirty (30) days of the publication of

the final Prospectus but not earlier than seven (7) days of such publication.


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2.22 ADDRESS OF BID COLLECTIONCENTREBid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the bids for the

Book Building Offer of Next Capital Limited in order to provide convenient access to bidders to participate

in the bidding process. Addresses, detail of contact persons and fax numbers of the Bid Collection Centersare given in paragraph 2.4.


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2.23 STATEMENT BY THE ISSUERDate: November 17, 2011

Ref: NCL/CEO-11/11-007

The General Manager,

Karachi Stock Exchange (Guarantee) Limited,

Stock Exchange Building,

Stock Exchange Road,

Karachi.

Dear Sir,

On behalf of the Company, we confirm that all material information as required under the Companies

Ordinance, 1984 and the Listing Regulations of the Karachi Stock Exchange (Guarantee) Limited have beendisclosed in the Prospectus and that whatever stated in the Prospectus and the supporting documents is

true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of

NEXT CAPITAL LIMITED

-Sd-

--------------------------------

Najam Ali

(Chief Executive Officer)


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2.24 STATEMENT BY THE LEAD MANAGER7 December 2011

The General Manager,Karachi Stock Exchange (Guarantee) Limited,



Karachi.

Being mandated as Lead Manager to this public Offer of Next Capital Limited, we confirm that all material

information as required under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations

of the Karachi Stock Exchange (Guarantee) Limited have been disclosed in this Prospectus and that

whatever stated herein and in the supporting documents is true and correct to the best of our knowledge

and belief and that nothing has been concealed.

On behalf of Arif Habib Limited:

-Sd-

---------------------------

Rafique BhundiHead, Corporate Finance

Arif Habib Limited


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2.25 STATEMENT BY THE BOOK RUNNER3 January 2012

The General Manager,Karachi Stock Exchange (Guarantee) Limited,



Karachi.

Being mandated as Book Runner to this public Offer of Next Capital Limited, we confirm that all material

information as required under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations

of the Karachi Stock Exchange (Guarantee) Limited have been disclosed in this Prospectus and that

whatever stated herein and in the supporting documents is true and correct to the best of our knowledge

and belief and that nothing has been concealed.

On behalf of ABA ALI HABIB Securities (Pvt.) Limited,

-Sd-

---------------------------Zahid Ali Habib

Managing Director


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PART 3

SHARE CAPITAL AND RELATED MATTERS3.1 SHARE CAPITAL

No. of

sharesFace value(Rs.) Premium(Rs.) Total(Rs.)

AUTHORIZED CAP ITAL

25,000,000 Ordinary shares of Rs. 10/- each 250,000,000 - 250,000,000

ISSUED, SUBSCRIBED, & PAID UP CAPITAL

Issued for cash

10,000,000 Issued for Cash: Ordinary shares of Rs. 10/- each 100,000,000 - 100,000,000

10,000,000 Total 100,000,000 - 100,000,000

No. of

sharesFace value(Rs.) Premium(Rs.) Total(Rs.)

THE EXISTING ISSUED, SUBSCRIBED & PAID UP

CAPITAL OF THE COMPANY IS HELD AS FOLLOWS:

Shares held b y Sponsors

4,000,000 Mr. Najam Ali 40,000,000 - 40,000,000

997,000 Mr. Nasir Mahmud Khan 9,970,000 - 9,970,000

501,000 Mr. Zulqarnain Mahmood Khan 5,010,000 - 5,010,000

5,498,000 Sub-total 54,980,000 - 54,980,000

Shares held b y Directors

1,000 Mr. Fais al Ali Asgha r 10,000 - 10,000

250 Mr. Shahrukh Ali Raza Mirza 2,500 - 2,500

250 Ms. Hanna Khan 2,500 - 2,500

250 Ms. Sana Quadri 2,500 2,500

250 Mr. Muhammad Zubair Elahi 2,500 2,500

2,000 Sub-total 20,000 20,000

Shares Held by Other Shareholders

2,000,000 Mr. Arif Habib 20,000,000 - 20,000,000

1,500,000 Abbas Corporation (Pvt.) Ltd. 15,000,000 - 15,000,000

1,000,000 MCB Bank Limited 10,000,000 - 10,000,000

4,500,000 Sub-total 45,000,000 - 45,000,000

10,000,000 Total 100,000,000 - 100,000,000

PRESENT ISSUE

No. of

shares

Face value

(Rs.)

Premium

(Rs.)

Total(Rs.)

The present Issue of 10,000,000 ordinary shares (50% of

post IPO paid-up capital) having par value of Rs. 10/- each is

being made as under:

7,500,000 Allocation to Institutions/HNWIs Investors through book

building mechanism*

75,000,000 Nil 75,000,000

2,500,000 General Public** 25,000,000 Nil 25,000,000

10,000,000 Total Present Offer 100,000,000 Nil 100,000,000

20,000,000 Grand Total 200,000,000 Nil 200,000,000

*Shares are being offered to the Institutional Investors and HNWIs at the strike price of PKR 10 per share,

determined through the Book Building mechanism. The floor price set was PkR 10 per share


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**General public portion of the Issue comprises of 2.5 million ordinary shares (25% of the totalIssue) with an additional green shoe option of up to 2.5 million ordinary shares at a price of PKR 10per share (the Strike Price Determined through the Book Building Process).

Notes:

(i) The Sponsors of the Company shall retain at least twenty-five percent of the capital of theCompany for a period of five years from the date of public subscription;

(ii) As per Regulation No. 6(7)(i) of KSEs listing regulations, sponsors shareholding in excess of 25%shall not be saleable for a period of six months from the date of public subscription;

(iii) The Company with the approval of shareholders by way of special resolution in general meetingheld on September 13, 2011 has entered into a Stock Option Agreement dated 7th October, 2011

with the Chief Executive, Mr. Najam Ali, whereby Mr. Najam Ali has been granted Options to

subscribe for the ordinary shares of the Company. Issuance of shares by the Company againstexercise of the Options by Mr. Najam is, however, subject to the approval of the Securities &

Exchange Commission of Pakistan (the Commission). In case the Company approaches theCommission with reference to the Commissions letter No. CLD/C&CD/Co-86/5/20011-5616

dated November 24, 2011 for seeking approval under Section 86 of the Companies Ordinance,

1984 and the Commission allows the Company to issue shares against the exercise of option by

Mr. Najam, interest of the shareholders may be adversely affected in the form of dilution of

their shareholding and decrease in the breakup value per share. Details of the Stock Option

Agreement may be seen in para 8.11, however, its salient features are given as under:

a) Extent of the Option: Up to 10% of the post IPO paid up capital of the Company ortwo million shares, whichever is lower;

b) Exercise Price: PKR 10/- per share

c) Consideration: Cash

d) Exercise Period: Five years and six months after one year from the date of

listing of the Company on the Karachi Stock Exchange.

e) Particulars of the person to

whom the Options have been

given:

Name: Mr. Muhammad Najam Ali;

Address: House No. 161, Main Khayaban-e-Hafiz,

Phase 6, DHA, Karachi;

Description: Individual; and

Occupation: Chief Executive Officer/Director of the Company

(iv) In case there is any contradiction between the contents of the Prospectus and the Stock OptionAgreement, the disclosures made in the prospectus shall prevail;

(v) The unexercised options granted by the Company to Mr. Najam Ali, Chief Executive Officer ofthe Company, pursuant to the Stock Option Agreement dated October 7, 2011 shall lapse in

case of his departure from the Company or the proposed holding company due to any reason.

3.2 OPENING AND CLOSING OF THE PUBLIC SUBSCRIPTION PERIODThe public subscription will open at the commencement of business hours on 20 March, 2012 and will

close on 21 March, 2012 at the close of business hours.


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3.3 INVESTOR ELIGIBILITY FOR PUBLIC ISSUEEligible investors include:

a)

Pakistani citizens resident in or Outside Pakistan or persons holding two nationalities includingPakistani nationality;

b) Foreign nationals whether living in or outside Pakistan;c) Companies, bodies corporate or other legal entities incorporated or established in or outside

Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the

case may be);

d) Mutual funds, provident/pension/gratuity funds/trusts (subject to the terms of their Trust Deedand existing regulations); and

e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.3.4 FACILITIESAVAILABLETONON-RESIDENTPAKISTANIANDFOREIGNINVESTORS

Non-resident Pakistani investors and foreign investors may subscribe for the shares being issued through

this Prospectus by using their Special Convertible Rupee Account (SCRA) as set out in Chapter 20 of the

Foreign Exchange Manual of the State Banks of Pakistan.

MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES OUT OF THE PUBLIC

PORTION OF THE ISSUE.

The basis and conditions of allotment to the general public shall be as follows:

(a) Application for shares below the total value of PKR 5,000 (Issue price x 500 shares) shall not beentertained.

(b) The amount of application for subscription of 500 ordinary shares is PKR 5,000 (Issue price x 500shares).

(c) Application for shares must be made for 500 shares or in multiple of 500 shares only. Applicationswhich are neither for 500 shares nor for multiples of 500 shares shall be rejected.

(d) SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BYSAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS MONEY SHALL BE LIABLE TOCONFISCATION UNDER SECTION 18-A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

(e) If the shares issued to the general public are sufficient for purpose, all applications shall beaccommodated.

(f) If the shares applied for are in excess of the shares offered to them, the distribution shall bemade by computer balloting, in presence of the representatives of the Karachi Stock Exchange in

the following manner:

I. If all applications for 500 shares can be accommodated, then all such applications shallbe accommodated first. If all applications for 500 shares cannot be accommodated

then balloting will be conducted among applications for 500 shares only.


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II. If all applications for 500 shares have been accommodated and shares are still availablefor allotment, then all applications for 1,000 shares shall be accommodated. If all

applications for 1,000 shares cannot be accommodated then balloting will be

conducted among applications for 1,000 shares only.

III. If all applications for 500 shares and 1,000 shares have been accommodated and sharesare still available for allotment, then all applications for 1,500 shares shall be accommodated.

If all applications for 1,500 shares cannot be accommodated then balloting will be

conducted among applications for 1,500 shares only.

IV. If all applications for 500 shares, 1,000 shares and 1,500 shares have beenaccommodated and shares are still available for allotment, then all applications for

2,000 shares shall be accommodated. If all applications for 2,000 shares cannot beaccommodated then balloting will be conducted among applications for 2,000 shares

only.

(g) After the allotment in the above mentioned manner, the balance shares, if any, shall be allottedin the following manner:

I. If the remaining shares are sufficient to accommodate each application for over 2,000shares, then 2,000 shares shall be allotted to each applicant and the remaining shares

shall be allotted on pro rata basis.

II. If the remaining shares are not sufficient to accommodate all the remaining applicationsfor at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to

each of the successful applicants.

(h) If the Issue is oversubscribed in terms of amount only then the allotment of shares shall be madeon the following basis:

I. First preference will be given to the applicants who applied for 500 shares;II. Next preference will be given to the applicants who applied for 1,000 shares;

III. Next preference will be given to the applicants who applied for 1,500 shares; and then;IV. Next preference will be given to the applicants who applied for 2,000 shares.

(i) After allotment of the shares in the above mentioned manner, the balance shares, if any, shall beallotted on a pro rata basis to the applicants who applied for more than 2,000 shares.(j) Allotment of shares will be subject to scrutiny of the applications for subscription of shares.(k) Applications, which do not meet with the above requirements or applications which are

incomplete will be rejected.

(l) If the general public portion gets oversubscribed, additional up to 2,500,000 Ordinary Shares willbe issued under Green Shoe Option, however even in that case the allotment criteria given above

shall be followed.


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3.5 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTSThe Company shall take a decision within ten (10) days of the closure of subscription list as to which

applications have been accepted or are successful and refund the money in cases of unaccepted or

unsuccessful applications within ten (10) days of the date of such decision, as required under Section 71 ofthe Ordinance.

As per sub-section (2) of Section 71 of the Ordinance, if refund as required under Sub-section (1) of Section

71 of the Ordinance is not made within the time specified therein, the directors of the Company shall be

jointly and severally liable to repay the money with surcharge at the rate of 1.5%, for every month or part

thereof from the expiration of the 15th day and, in addition, to a fine not exceeding PKR 5,000/- and in

case of continuing offense to a further fine not exceeding PKR 100/- per day after the said 15th day on

which the default continues. Provided that a director of the Company shall not be liable if he/she proves

that the default in making the refund was not due to any misconduct or negligence on his/her part.

3.6 CREDIT AND DISPATCH OF SHARE CERTIFICATES The Company will dispatch share certificates to successful applicants through their Banker to the Issue or

by crediting the respective Central Depository System (CDS) accounts of the successful applicants within

thirty (30) days of the close of public subscription, as per Listing Regulations of the Stock Exchanges.

Shares will be issued either in scrip-less form in the CDS of Central Depository Company of Pakistan

Limited (CDC) or in the shape of physical scrip on the basis of option exercised by the successful

applicants. Shares in the physical scrip shall be dispatched to the Bankers to the Issue within thirty (30)

days from the date of close of subscription list, whereas scrip less shares shall be directly credited through

book entries in the respective accounts maintained with the Central Depository Company of Pakistan

(CDCPL) Limited.

The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the relevant columns of

the Application Form. In order to exercise the scrip-less option, the applicant(s) should have CDS account

at the time of subscription.

If the Company makes a default in complying with the requirements of the Listing Regulations of the Stock

Exchanges, it shall pay to the Stock Exchange a penalty of PKR 5,000/- per day or part thereof during which

the default continues. The Stock Exchange may also notify the fact of such default and the name of the

Company by notice and also by publication in its daily Quotation.

3.7 TRANSFER OF SHARES3.7.1 PHYSICAL SCRIP

Under the provisions of Section 77 of the Companies Ordinance, 1984, the Directors of the Company shall

not refuse to transfer any fully paid share unless the transfer deed is, for any reason, defective or invalid.

Provided that the Company shall within 30 days from the date on which the instrument of transfer was


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lodged with it, notify the defect or invalidity to the transferee who shall, after the removal of such defect

or invalidity, be entitled to re-lodge the transfer deed with the Company.

3.7.2 TRANSFER UNDER BOOK ENTRY SYSTEMThe shares maintained with the CDS in the book entry form shall be transferred in accordance with the

provisions of the Central Depositories Act, 1997 and the Central Depository Company of Pakistan Limited

Regulations.

3.8 SHARES ISSUED IN PRECEDING YEARSNo. of Shares Par Value (PKR) Amount (PKR) Consideration Date of Issue

4,000 10 40,000 Cash 14-12-2009

5,996,000 10 59,960,000 Cash 21-12-2009

4,000,000 10 40,000,000 Cash 29-01-2010

10,000,000 100,000,000

3.9 PRINCIPAL PURPOSE OF THEPUBLIC ISSUEThe principal purpose of the public issue is to finance the launch of Companys new product & services

namely Money Market Brokerage, Commodity Trading and Investment Advisory. The IPO proceeds will be

utilized in the following manner: a) Money Market PKR 5.0 million, b) Commodity Market PKR 5.0 million,

c) Investment Advisory PKR 30 million, and d) Working Capital PKR 60 million.

In Money Market Brokerage NCL plans to bring fixed income trading capability to the retail investor

through an integrated online trading platform.

NCL plans to initiate commodities brokerage based on the following commodities being traded at the

Pakistan Mercantile Exchange (PMEX, formerly known as National Commodities Exchange Limited): gold,

silver, palm oil, crude oil, rice, and interest rate futures.

In case of Investment Advisory, the Company will focus on two main market segments for Investment

Advisory business, i.e. institutional and high net worth individuals, providing Investment across a broad

range of asset classes including equities, debt, and commodities.

Further the management has decided to list the shares of the Company on the stock exchange to broaden

its investors base and invite general public to participate in the profits of the Company by providing them

with an avenue of investment in the Company.

3.10 INTEREST OF SHAREHOLDERSNone of the holders of the issued shares of the Company have any special or other interest in the property

or profits of the Company other than as holders of the ordinary shares in the capital of the Company.


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3.11 DIVIDEND POLICYThe rights in respect of capital and dividends attached to each share are and will be the same. The

Company in its general meetings may declare dividends but no dividends shall exceed the amount

recommended by the Directors.

The Directors may from time to time pay to the members such interim dividends as appear to the directors

to be justified by the profits of the Company. No dividends shall be paid otherwise than out of the profits

of the Company for the year or any other undistributed profits.

No unpaid dividend shall bear interest or mark-up against the Company. The dividend shall be paid within

the period laid down in the Ordinance.

3.12 ELIGIBILITY FOR DIVIDENDThe Company in this matter will follow the provisions of Section 92 (2) of the Companies Ordinance 1984,which reads as under:

"The new shares issued by a company shall rank pari-passu with the existing shares of the class to which

the new shares belong in all matters, including the right to such bonus or right issue and dividend as may

be declared by the Company subsequent to the date of issue of such new shares".

3.13 DEDUCTION OF ZAKATIncome distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and

Ushr Ordinance, 1980 (XVIII of 1980).

3.14 WITHHOLDING TAX ON DIVIDENDSDividend distribution, if any, to the shareholders will be subject to withholding tax under section 150 of

the Income Tax Ordinance, 2001 at the rate of 10% as specified in part I, Division III of Fi rst Schedule to the

said Ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said

Ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits.

3.15 CAPITAL GAINS TAXCapital gains derived from the sale of listed securities are taxable in the following manner under section

37A of Finance Act 2011;

Tax Rate

Holding period of securities

S. No. Tax Year less than six months

more than six months

but less than 12

months

more than one year

1 2011 10.0% 7.5% 0%

2 2012 10.0% 8.0% 0%

3 2013 12.5% 8.5% 0%

4 2014 15.0% 9.0% 0%

5 2015 17.5% 9.5% 0%


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3.16 DEFERRED TAXATIONDeferred tax is accounted for using the liability method in respect of all temporary differences at the

balance sheet date between the tax base of assets and liabilities and their carrying amount. Deferred tax

liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for alldeductible temporary differences to the extent that it is probable that the temporary difference will

reverse in the future and the taxable profits will be available against which the temporary differences can

be utilized.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profit will be available to allow deferred tax

asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period

when the asset is realized or the liability is settled, based on the tax rates that have been enacted orsubsequently enacted at the balance sheet date.

The Company has booked deferred tax assets of PKR 3,097,186 as of June 30th, 2011.

3.17 SINDH SALES TAX ON SALE/PURCHASE OF SHARESUnder the Constitution of Pakistan and Articles 49 of the 7th NFC Award the Government of Sindh has

promulgated the Sindh Sales Tax on Services Act, 2011 (Sindh Act No. XII of 2011) (the Act) which has

taken effect from 01 July 2011. The Sindh Revenue Board constituted under the Act (Sindh Act No. XI of

2010) administers and regulates the levy and collection of the Sindh Sales Tax (SST) on the taxable services

provided or rendered in Sindh.

The value of taxable services for the purpose of levy of sales tax is the gross commission charged from

clients in respect of purchase or sale of shares in a Stock Exchange under section 41(1) of the Sindh Sales

Tax Rules, 2011, dated 30th June 2011 The Second Schedule of the Act levies a sales tax on Brokerage at

the rate of 16%. The sales tax is withheld as per the requirements of Sindh Sales Tax Special Procedure

(Withholding) Rules, 2011.

3.18 WITHHOLDING TAX ON SALE/PURCHASE OF SHARES0.01% Withholding Tax will be charged on the sale/purchase value on the sale/purchase of shares/

Modaraba certificates/ instruments of redeemable capital.

3.19 TAX CREDIT FOR INVESTMENT IN IPOUnder section 62 of the Income Tax Ordinance, 2001, a resident person other than a company shall be

entitled to a tax credit for a tax year in respect of the cost of acquiring in the year new shares offered to

the public by a public company listed on a stock exchange in Pakistan, provided the resident person is the

original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan

Time limit for holding of shares has been designated as 36 months to avail tax credit. The amount of

investment, eligible for tax credit, is prescribed in section 62 of the said Ordinance.


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3.20 TAX CREDIT FOR ENLISTMENTUnder section 65C of the Income Tax Ordinance, 2001, tax credit at 15% of the tax payable shall be

allowed for the tax year in which a Company is l isted on a Stock Exchange in Pakistan.

3.21 RATIONALE FOR FIXING FLOORPRICE OF PKR10ABOVE BREAK UP VALUEThe Company is issuing shares at PKR 10 per share, above the break-up value per share (PKR 8.24 per

share as on June 30, 2011 & PKR 8.02 per share as on September 30, 2011), justification of which is

mentioned as follows:

i. STRONG CORPORATE CULTURENCL brings much needed professionalism and neutrality to Pakistans financial services industry. Conflicts

of interest between employees and clients, and management and shareholders have been eliminated/

reduced through putting in place the appropriate incentive structures. The Sponsors of NCL are a group ofwell known and reputable individuals/institutions within Pakistans capital markets. Mr. Najam Ali,

majority shareholder and Chief Executive of the Company, has played an active part in bringing in

successful capital market reforms in Pakistan. Previously associated with JS Investments Limited, Mr. Ali

helped the company to achieve the highest rating of AM2 Plus and emerged as the largest private sector

asset management company in Pakistan. Other sponsors of NCL include leading business names in

Pakistan such as Mr. Arif Habib, MCB Bank and Abbas Corporation (Pvt.) Limited.

ii. COST AND CAPITAL EFFICIENCIES MAXIMIZED TO MAXIMIZE SHAREHOLDER VALUEBecause NCL was formed post the market crash of 2008, its business model has been developed keepingthe new economic realities in mind. Cost efficiencies are maximized through a focus on identifying and

capturing synergies across business divisions.

An optimal capital structure has also been identified. Because the nature of existing and planned

businesses of NCL is not capital intensive, the Company does not need large amounts of capital. Capital

efficiency will allow shareholders to enjoy higher ROEs.

iii. VALUE CREATION EXPECTED FROM GROWTHSince the commencement of operations in April 2010, NCL has made significant progress and positioned

itself as a major player in Pakistans equity brokerage and Investment Banking market:

Secured an average market share to date in equity brokerage of 3.0%; Successful in executing its first Investment Banking deal; Superior quality of the research


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PART 4

UNDERWRITING,COMMISSIONS,BROKERAGE AND OTHER EXPENSES4.1 UNDERWRITING

BOOK BUILDING PORTION

Aba Ali Habib has been mandated to act as the Book Runner to the Issue. The Book Runner will underwrite

the Book Building portion of the Issue which comprises of 7.50 million Ordinary Shares within two (2)

working days of the closing of the bidding period at the strike price determined through the book building

process.

In the opinion of the Directors, the resources of the Underwriter are sufficient to discharge its

underwriting commitments/obligations.

PUBLIC PORTION

As required under Clause 6 of Appendix 4 of the Listing Regulations of the Karachi Stock Exchange (G)

Limited, the public portion of the Issue of 2,500,000 ordinary shares will be underwritten as follows:

Name of Underwriter Shares Underwritten Amount (PKR)

Silkbank Limited 1,000,000 10,000,000

Pak Oman Investment Company Limited 1,000,000 10,000,000

Pak Brunei Investment Company Limited 500,000 5,000,000

TOTAL 2,500,000 25,000,000

4.2 BUY BACK/REPURCHASE AGREEMENTTHE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY BACK/RE-PURCHASE AGREEMENT WITH THE

ISSUER OR ANY OTHER PERSON IN RESPECT OF THIS ISSUE.

ALSO, NEITHER THE ISSUERS NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY

BACK/REPURCHASE AGREEMENT WITH THE UNDERWRITERS OR THEIR ASSOCIATES. THE ISSUERS AND

ITS ASSOCIATES SHALL NOT BUYBACK/REPURCHASE SHARES FROM THE UNDERWRITERS AND THEIR

ASSOCIATES.

4.3 UNDERWRITING COMMISSIONBook Building Portion

The Book Runner will be paid a Book Running & Underwriting Commission at the rate of 1.50% of Book

Building portion of the issue, i.e. 1.50% of PKR 75 million.

In addition to the underwriting commission, the Book Runner will be paid a take-up commission at the rate

2.00% of the amount taken up.


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General Public Portion

The underwriters have been paid an underwriting commission at the rate of 1.50% of the amount

underwritten by them. In addition, a take up commission at the rate of 2.00% shall be paid to the

underwriters on the value of shares to be taken up by them by virtue of their respective underwriting

commitments/obligations.

4.4 COMMISSION TO THE BANKERS TO THE ISSUECommission at the rate of 0.50% of the amount collected on allotment in respect of successful applicants

will be paid by the Company to the Bankers to this Issue for services to be rendered by them in connection

with this Public Issue, plus out-of-pocket expenses, if any.

4.5 BROKERAGEFor this Issue, brokerage shall be paid to the members of KSE, LSE and ISE at the rate of 1.0% of the value

of shares actually sold through them. No brokerage shall be paid in respect of shares actually taken up bythe underwriters by virtue of their underwriting commitments.

4.6 ESTIMATED EXPENSES TO THE ISSUEExpenses to the Issue are estimated not to exceed PKR 10.517 million. The breakup of these preliminary

expenses is given below:

Expenses RateAmount

(PKR)

Underwriting Commission Book Building 1.5% 1,125,000

Underwriting Commission General Public 1.5% 375,000

Take up Commission Book Building* 2.00% 1,500,000

Take up Commission General Public* 2.00% 500,000

Bankers to the offer (Book Building) Commission 0.50% 375,000

Brokerage to Members of the Stock Exchange 1.00% 1,000,000

Bankers to the offer (Public portion) Commission 0.50% 125,000

Printing, Publication and notice Costs 1,000,000

Advisory & Underwriting arrangement fee 1,500,000

KSE Fees and Listing Charges 417,500

KSE Software Charges 250,000

CDC Charges 200,000

SECP Application and Processing Fee 50,000

Legal & Professional Fees 100,000

Balloting Agent 500,000

Marketing Expenses 1,000,000

Miscellaneous Cost 500,000

Total 10,517,500

*These represent the maximum amount to be charged as take up commission on

Book Building and General Public portions .


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PART 5

HISTORY AND PROSPECTS5.1 THE COMPANY

Next Capital Limited (Next Capital, NCL or the Company), was incorporated in Pakistan on December

14, 2009 as a non-listed public company under the Companies Ordinance, 1984. The Company has

obtained corporate membership from the Karachi Stock Exchange (G) Limited on 02 February 2010. The

registered office of the Company is located at 8th Floor, Horizon Towers Plot No. 2/6, Block 3 - Clifton,

Karachi.

The main object of the Company is the provision of financial services including equity brokerage, equity

research, corporate finance, investment advisory, commodity trading and money market & FX trading. It

is registered as a broker with the Securities and Exchange Commission of Pakistan (the SECP) under the

Brokers and Agents Registration Rules, 2001 renewable every year. The branch office of the Company is

located at Room No. 416, 4th Floor, Siddiq Trade Centre, 72- Main Boulevard Gulberg, Lahore.

5.2 THE SPONSORSi. MR.MUHAMMED NAJAM ALI (CHIEF EXECUTIVE OFFICERNEXT CAPITAL LIMITED)

Mr. Najam Ali brings on to the venture over 18 years of rich experience in Pakistans capital markets the

securities market regulation and infrastructure development of key institutions. Prior to forming NCL, he

served as the Chief Executive Officer at JS Investments Limited (JS Investment). During his tenure at JS

Investments, it achieved highest rating of AM2 Plus in the industry and remained the largest assetmanagement company in the private sector.

Mr. Najam was also the foundingChief Executive Officer of the Central Depository Company (CDC)

which is the Pakistans only securities depository established by Citigroup, IFC and Pakistans stock

exchanges. While at CDC, he also led the development and implementation of the National Clearing and

Settlement System, which is the centralized clearing system in Pakistan for all the stock exchanges. The

success of these projects has laid the foundation of a world class Capital Market that has earned him

praise and recognition at the national level.

In 2003, he worked as an Executive Director Securities Market & Non Banking Finance Companies

(NBFCs) at Securities & Exchange Commission of Pakistan (SECP) and served twice as the Chairman

of Mutual Funds Association of Pakistan (MUFAP).

During his prosperous career, he has also served on the Board of Directors of Pakistan Oilfields Limited

and has also previously been a Director of the Karachi Stock Exchange (Guarantee) Limited (KSE), the

National Clearing Company of Pakistan Limited(NCCPL) and Askari Bank Limited.

After having qualified as a chartered accountant with Robson Rhodes in the U.K, he worked with Fidelity

investment Bank as a Group Financial Controller and Head of Money and Capital Markets.


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By qualification, Mr. Najam Ali is a member of the Institute of Chartered Accountants in England & Wales

and Institute of Chartered Accountants of Ontario Canada. He is also a Certified Public Accountant

USA and holds a Bachelor degree in Economics from the University of Michigan, Ann Arbor, USA.

ii. MR.NASIR MAHMUD KHANDr. Nasir Mahmud Khan is a Senior Physician and Cardiologist by profession. He has also served as Chief

Medical Officer in Pakistan Railways.

He has obtained post graduate degree from Royal College of Physician, UK, and is currently working as a

consultant at Military Hospital, Lahore.

iii. MR.ZULQARNAIN MAHMOOD KHANEXECUTIVE DIRECTOR (HEAD OF SALES),NEXT CAPITAL LIMITED Mr. Zulqarnain Khan is currently heading the sales team at Next Capital Limited. Prior to joining Next

Capital Mr. Khan was Head of North for JS Global Capital Limited where he was reporting directly to the

CEO. His job responsibilities included client handling, business development and risk management.

He has also worked as senior Institutional Equity trader with AKD Securities Limited. During his tenure

there, AKD Securities limited was awarded the Best Brokerage House award by the CFA Association of

Pakistan. Mr. Khan has also worked as an Assistant Vice President in Faysal Bank limited within the

commercial banking division and managed a team with an asset portfolio of close to PKR 1 billion. Mr.

Khan holds an MBA from Philadelphia University, USA.

5.3 ORGANIZATIONAL STRUCTURENCLs organogram is given below:

CEO

Business

Functions

Corporate

FinanceEquity Market

Trading Settlement Operations

Admin And Support

Systems

Administratio

Documents

Prospectus Next Capital IPO.pdf