KARACHI: A subsidiary of IT firm Supernet Ltd is planning to buy Hallmark Company Ltd as part of a reverse merger to attain the listing status.

The reverse merger allows a private entity — Super Infrastructure Solutions Ltd in this case — to become a publicly traded firm without going through the tedious and costly process of an initial public offering.

Super Infrastructure Solutions Ltd, which is mainly involved in the business of solar panels, is looking to acquire at least 51 per cent shareholding in Hallmark Company Ltd — a publicly traded firm that was originally a general insurance provider but surrendered its licence to focus on IT business around 2017.

Speaking to Dawn, Supernet Ltd Company Secretary Waseem Ahmad said the listed company currently runs “limited operations”.

“Even those operations will be carved out of it in case our deal goes through. We’re only interested in obtaining the listing status of the target company,” he said.

Supernet Ltd owns 99.98pc shares in Super Infrastructure Solutions Ltd.

“Of the many unlisted subsidiaries of Supernet Ltd, this is the most promising one. The acquisition of a listed entity will lead to value addition for Supernet Ltd,” he said.

The potential acquirer will conduct due diligence on Hallmark Company Ltd and, depending on its outcome, make a share purchase offer to both sponsors and retail investors at the same rate.

At Rs115 per share, the listed company is currently worth Rs57.5 million. Even though the public announcement mentioned its target is to buy at least 51pc shareholding, Mr Ahmad said the potential acquirer is eyeing the entire 63pc stake that the sponsors of Hallmark Company Ltd currently hold.

It means the expected transaction value should be around Rs36.2m for a 63pc shareholding at the going market rate.

A subsidiary of Telecard Ltd, Supernet Ltd went public last year and raised Rs475m. It sold 18.81pc of the total post-listing shareholding at Rs22.50 per share.

The transaction constituted the first-ever listing of a technology company on the PSX’s Growth Enterprise Market (GEM) counter, which is reserved for riskier entities seeking public funds.

However, Supernet Ltd is currently in the middle of a migration to the PSX’s main board owing to little trading that takes place every day on the GEM counter for myriad reasons.

Published in Dawn, March 4th, 2023