Agha Steel Industries Ltd (ASIL) planned to raise around five billion rupees through a local Islamic bond to propel its production to meet growing steel demand in Pakistan, the company said in a statement, after the steelmaker shelved its plan last year to roll out the country’s biggest-ever private sector public offer.“ASIL intends to issue OTC (over the counter) listed, rated and secured sukuk of up to Rs5 billion (inclusive of green shoe option of Rs1 billion) for the tenor of six years inclusive of a grace period of 2 years in order to fulfill its expansion plans and invest in futuristic technologies,” the steelmaker said.

Agha Steel mandated Habib Bank and Bank AL Habib as mandated lead advisers and arrangers for the transaction.The bids from qualified institutional buyers are expected from April 10 to 30. “Specifically identified musharika assets are set to be utilised under a qualified shariah advisory board,” it added.

Last year, the Karachi-based steel manufacturer planned to raise Rs10 billion through an initial public offering to lift its production capacity to satiate a gigantic appetite of infrastructure developments estimated at more than $55 billion under the China-Pakistan Economic Corridor. World Steel Association termed Pakistan as one of the world’s fastest-growing steel producers. The country’s crude steel output climbed nearly 40 percent to five million tons in 2017. Likewise, construction sector that accounts for 2.7 percent to GDP grew nine percent during the last fiscal year of 2017, State Bank of Pakistan said in its annual economic report.

Agha Steel planned to utilize the funds from local Islamic bond to meet costs associated with balancing, modernisation and replacement activities for existing and new facilities. It will also commission a new rolling mill unit to increase the annual re-rolling capacity of the company to 650,000 tons from 150,000 tons.