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ADVICE FOR G ENERAL P UBL IC THE I NVESTORS ARE S TRONGLY ADVISED I N THEI R O W N I NTEREST T O CAREFULLY R EAD THE C ONTENTS O F THIS PROSPEC TUS , ESP ECIALLY THE RISK FAC TORS G IVEN A T PARA 5 .6 , BEFORE M AKING ANY I NVESTMENT DECI SION
SUBMISSION OF F ICTITIOUS AND MUL TIPLE APPLICA TIONS (M ORE THAN ONE APPLICATIONS BY SAME PERSON ) I S PROHIBITED AND SUCH APPLICA TIONS MONEY IS L IABLE T O CONFISCA TION UNDER S EC TION 1 8 A O F THE S ECURITIES AND EXCHANGE ORDINANCE 1969.

ADVICE FOR INSTITUTIONAL INVESTORS AND H IGH NET W ORTH INDIV IDUAL INVESTORS A SI NGLE I NVESTOR C ANNOT SUBMIT MORE THAN O NE BIDDING APPLICATION EXC EPT I N TH E CASE O F REVISION O F BID . I F AN I NVESTOR S UBMI TS M ORE TH AN O NE BIDDING APPLICATI ON THEN ALL SUCH APPLICATIONS SHALL B E SUBJEC T TO R EJEC TION .
THE BOOK BUIL DING PORTION COMPRISIN G OF 7,500 ,000 ORDINARY SHARES HAS BEEN SUCCESSFULLY CLOSED. THE PRESEN T ISSUE OF 2 ,500 ,000 ORDINARY SHARES WITH AN ADDITION AL 2 ,500 ,00 0 ORDIN ARY SHARES UN DER GREEN SHOE OPTION IS BEING MADE TO THE GEN ERAL PUBL IC AT A PRICE OF PKR 10/- PER ORDINARY SHARE (I.E. STRIKE PRICE DETERMIN ED THROUGH THE BOOK BUIL DIN G)

NEXT CAPITAL LIMITED


PROSPECTUS
FOR ISSUE OF 10 MILLION ORDINARY S HARES (50% OF THE E NHANCED P AID UP CAPITAL ) OF FACE VALUE OF PKR 10 E ACH BOOK BUILDING PORTION OF THE ISSUE COMPRISES O F 7.5 MILLION ORDINARY SHARES (75% OF THE TOTAL ISSUE) AT A F LOOR PRICE OF PKR 10 PER SHARE GENERAL P UBLIC PORTION OF THE I SSUE COMPRISES OF 2.5 MILLION ORDINARY SHARES (25% OF THE TOTAL ISSUE ) WITH AN ADDITIONAL GREEN SHO E OPTION OF UP TO 2.5 MILLION ORDI NARY SHARES AT THE STRIKE PRICE OF PKR 10 PER S HARE D ETERMINED T HROUGH THE BOOK BUILDING P ROCESS

BIDDING P ERIOD: 21 TO 22 F EBRUARY 2012 (BOTH D AYS INCLUSIVE) (FROM 9:00 A .M. TO 5:00 P. M.) DATE OF PUBLIC SUBSCRIPTION : 20 TO 21 MARCH 2012 (BOTH D AYS INCLUSIVE) DURING BANKING H OURS
L EAD MANAGER BOOK RUNNER

BOOK BUILD ING POR TION UNDER WRITTEN BY :

GENERAL PUBLIC PORTION UNDERWR ITTEN BY: Silkbank Limited Pak Oman Investment Company Limited Pak Brunei Investment Company Limited

THE DATE OF P UBL ICATION OF THIS P ROSPECTUS : 12 MARCH , 2012

Initial Public Offering of Next Capital Limited

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 material in 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 and belief; 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 Ali Chief Executive Officer

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

TABLE OF CONTENTS
1. 2. 3. 4. 5. 6. 7. 8. 9. APPROVALS AND LISTING ON THE STOCK EXCHANGE...................................................................................6 BOOK BUILDING P ROCEDURES ................................................................................................................ 8 SHARE CAPITAL AND RELATED MATTERS ................................................................................................23 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES .........................................................32 HISTORY AND P ROSPECTS ....................................................................................................................34 FINANCIAL INFORMATION....................................................................................................................42 MANAGEMENT .................................................................................................................................. 50 MISCELLANEOUS INFORMATION............................................................................................................ 57 APPLICATION AND ALLOTMENT INSTRUCTIONS.........................................................................................63

10. BIDDING FORM OF NEXT CAPITAL LIMITED .............................................................................................67 11. SIGNATORIES TO THE P ROSPECTUS ........................................................................................................ 68 12. MEMORANDUM OF ASSOCIATION......................................................................................................... 69

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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 AKD Trade Bid ABA ALI HABIB Securities (Pvt.) Limited Aqeel Karim Dhedhi Trade 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. Any eligible prospective investor who makes a bid pursuant to the terms of the Preliminary Prospectus and the Bidding Form. The total amount of the bid which is equivalent to the product of the bid price and the number of shares bid for. 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. 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. The period during which bids for shares of the Company will be made by Institutional Investors and HNWIs. The Bidding Period commences on 21-022012 and ends on 22-02-2012 (daily from 9:00 a.m. to 5:00 p.m.) The date after which BR will not accept any bids for the book building portion of the Issue.

Bidder

Bid Amount

Bid Collection Centre

Bidding Form

Bidding Period

Bidding Process Ending Date

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

Bidding Process Starting Date

The date on which BR shall start accepting bids for the book building portion of the Issue. A mechanism of price determination through which indication of interest for subscription of shares issued by the Company is collected from Institutional Investors 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. 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. ABA ALI HABIB Securities (Pvt.) Limited A bank authorized by the issuer for the deposit of bid money Central Depository Company of Pakistan Limited Corporate Finance & Advisory Eastern Capital Limited Trade 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. Fawad Yusuf Securities Trade All individual and institutional investors including both Pakistani (residents & non-residents) and foreign investors. The price at which ordinary shares are issued to general public. This price can be at or below the strike price. Individual investor who applies or bids for shares of the value of PKR 1,000,000/- or above in the book building process. Both local and foreign institutional investors. An investment finance company as defined in the Non-Banking Finance Companies and Notified Entities Regulations, 2008. 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

Book Building

Book Building Account

Book Runner (BR) Collection Bank CDCPL CF & A ECLTRADE Floor Price

FYSLTRADE General Public

General Public Issue Price

High Net worth Individual (HNWI) Institutional Investors Investment Finance Company

Issue

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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) Limit Price Arif Habib Limited (AHL) The maximum price a prospective institutional investor or HNWI is willing to pay for a share under the Book Building process. The partial or total amount, as the case may be, paid by a bidder at the time of making a bid. Next Capital Limited The Companies Ordinance, 1984 Ordinary Shares of Next Capital Limited having face value of PKR 10 each unless otherwise specified in the context thereof. The preliminary prospectus containing all the information and disclosures as required under the Companies Ordinance 1984, and the Listing Regulations of the 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. A bid for a specified number of shares at the strike price to be determined through the Book Building process. A series of limit bids at increasing prices. 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.

Margin Money

NCL Ordinance Ordinary Shares

Preliminary Prospectus

Strike Order

Step bid Strike price

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

PART 1

1.1

APPROVALS AND LISTING ON THE STOCK EXCHANGE


APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF P AKISTAN
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 P ROSPECTUS BY THE KARACHI STOCK EXCHANGE (GUARANTEE) LIMITED


This 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 any commitment 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 particular matter 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 in reliance 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 this document nor the ability of the Company to fulfill its obligations there under.

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

1.3

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

FILING OF P ROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES


The 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 required under Section 57(4) of the Ordinance. c) Written confirmations of the Legal Advisor to this Issue and Bankers to this Issue, mentioned in this 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 the Company 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 EXCHANGE


An 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 ISSUER
On 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/__________________ Najam Ali Chief Executive Officer Sd/__________________ Zubair Ellahi Chief Financial Officer

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

PART 2

2.1

BOOK BUILDING PROCEDURES


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 paidup 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 P ROCEDURE


Book 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 that the 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 a specified 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 the Book 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.

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

Step Bid: A series of limit bids at increasing prices. The aggregated amount of step bid shall not be less than 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 per share 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 institutional bidders 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 MANAGER
Arif 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.

Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

2.4

BOOK RUNNER
ABA 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 RUNNER


The 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 Listing Regulations 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 out the 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 addresses Karachi Mr. Waqar Ahmed Room# 419, Stock Exchange Building I. I. Chundrigar Road, Karachi. Tel: +9221 32429664-67 Fax: +9221 32413822 Email: info@abaalihabib.com Lahore Attn: Mr. Zulqarnain Mahmood Khan Room No. 416, 4th Floor Siddiq Trade Centre 72 Main Boulevard Gulberg Lahore. Tel: +9242-35781940-41 Fax: +9242-35781942 Email: zulqarnain.khan@nextcapital.com.pk Islamabad Attn: Ms. Sidra Khalid

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Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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: sidrakhalid@summitbank.com.pk asifraza@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 from the 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 daily Newspaper 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 Dutch Auction Methodology for display of the order book and determination of the strike price, on the terms 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 the Exchange, 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 system developed 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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Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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 P ERIOD


The 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 Bidding Period Ends on *(Both Days Inclusive) 21 February 2012 22 February 2012

2.7

ELIGIBILITY TO P ARTICIPATE IN BIDDING


Eligible 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 the Registered 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 at the addresses provided in para 2.4 to register their Bids; THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR THROUGH FAX AT NUMBER: (Karachi) +92-21-32413822, (Lahore) +92-42-35781942, (Islamabad) +92-512279166.

2.9

BIDDING FORM AND P ROCEDURE FOR BIDDING


Standardized 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) +9251- 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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Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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 to prospective 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 English daily 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) +92-2132413822, (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 in respect 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 of bids placed by institutional investors. x. 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. 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 of their 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 2.12 and 2.14). xv. BR shall maintain record of the bids received/ rejected / revised / withdrawn along with identities of the bidder and evidence of amount received. xvi. BR shall ensure that all the bids received by the bid collection centers are entered into the system developed 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 the Company.

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Book Runner

Lead Manager

Initial Public Offering of Next Capital Limited

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, deposit the 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 allotted to 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 the bidding period. xxii. Final allotment of shares out of the Book Building Offer shall be made after receipt of full subscription money 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 shares in excess of 5% of the book building portion of the Issue. 2.10 BOOK BUILDING AND GENERAL P UBLIC ACCOUNT The 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 P AYMENT INTO THE BOOK BUILDING ACCOUNT The 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/BID AMOUNT EQUAL TO THE PRODUCT OF THE NUMBER OF SHARES THEY ARE BIDDING FOR AND THE FLOOR PRICE WHICH IN THIS CASE IS 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 12.50 million 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 is arrived 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 P AYMENT BY FOREIGN INVESTORS Foreign 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 BIDDER The 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 RUNNER In 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 W ITHDRAWAL OF BIDS BY THE BIDDER A 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 condition or procedure disclosed in the Prospectus. 2.16 W ITHDRAWAL OF THE ISSUE BY THE COMPANY a) 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 P RICE a) 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 strike order(s) shall not be taken into consideration. b) The order book shall display the bids tabular form in descending order along with the number of shares 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. ii. After the lowest limit bid, in case the limit bids placed are not sufficient for full allotment of the shares offered, or, Immediately, after the limit bid at which all the shares offered can be allotted, in case the limit bids 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/discovered as 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
Bidder Institution A Institution E Institution B HNWI A Institution C HNWI B Institution D HNWI C Institution C Institution B HNWI A Institution C Price (PKR per share) 15.00 14.50 13.75 13.00 11.25 11.05 X X 10.50 10.25 10.10 10.05 Quantity (shares in million) 1.00 1.50 2.00 1.75 2.00 0.75 1.00 1.00 3.00 4.00 2.75 6.00 Cumulative number of shares 1.00 2.50 3.00 4.75 6.75 7.50 8.50 9.50 12.50 12.50 15.25 21.25 Category of order Limit price Limit price Limit price Step bid Step bid Limit price Strike bid Strike bid Step bid Limit price Step bid Step bid Date Day 1 Day 3 Day 2 Day 3 Day 1 Day 2 Day 2 Day 3 Day 1 Day 2 Day 3 Day 1

Bid withdrawn

Strike price determined through Dutch Auction Method

Total shares subscribed

Bid has been revised and placed at PKR 13.75 per share

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. At Rs. 13.00 per shares, investors are willing to buy 1.75 million shares. Since 2.75 million shares are still available, therefore, the price will set lower.

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At Rs. 11.25 per shares, investors are willing to buy 2.00 million shares. Since 0.75 million shares are still available, therefore, the price will set lower. 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 price and 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 SHARES After 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 MONEY Investors 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 UNDERWRITING After 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 P UBLICATION OF THE FINAL PROSPECTUS The 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 of the 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 COLLECTION CENTRE Bid 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 Centers are given in paragraph 2.4.

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2.23 STATEMENT BY THE ISSUER Date: 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 been disclosed 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 MANAGER 7 December 2011 The General Manager, Karachi Stock Exchange (Guarantee) Limited, Stock Exchange Building, Stock Exchange Road, 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 Bhundi Head, Corporate Finance Arif Habib Limited

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2.25 STATEMENT BY THE BOOK RUNNER 3 January 2012 The General Manager, Karachi Stock Exchange (Guarantee) Limited, Stock Exchange Building, Stock Exchange Road, 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

3.1

SHARE CAPITAL AND RELATED MATTERS


SHARE CAPITAL
No. of shares 25,000,000 AUTHORIZED CAPITAL Ordinary shares of Rs. 10/- each ISSUED, SUBSCRIBED, & PAID UP CAPITAL Issued for cash Issued for Cash: Ordinary shares of Rs. 10/- each Total Face value(Rs.) 250,000,000 Premium(Rs.) Total(Rs.) 250,000,000

10,000,000 10,000,000 No. of shares

100,000,000 100,000,000 Face value(Rs.)

Premium(Rs.)

100,000,000 100,000,000 Total(Rs.)

4,000,000 997,000 501,000 5,498,000 1,000 250 250 250 250 2,000 2,000,000 1,500,000 1,000,000 4,500,000 10,000,000

THE EXISTIN G ISSUED, SUBSCRIBED & PAID UP CAPITAL OF THE COMPANY IS HELD AS FOLLOWS: Shares held by Sponsors Mr. Najam Ali Mr. Nasir Mahmud Khan Mr. Zulqarnain Mahmood Khan Sub-total Shares held by Directors Mr. Faisal Ali Asghar Mr. Shahrukh Ali Raza Mirza Ms. Hanna Khan Ms. Sana Quadri Mr. Muhammad Zubair Elahi Sub-total Shares Held by Other Shareholders Mr. Arif Habib Abbas Corporation (Pvt.) Ltd. MCB Bank Limited Sub-total Total

40,000,000 9,970,000 5,010,000 54,980,000 10,000 2,500 2,500 2,500 2,500 20,000 20,000,000 15,000,000 10,000,000 45,000,000 100,000,000

40,000,000 9,970,000 5,010,000 54,980,000 10,000 2,500 2,500 2,500 2,500 20,000 20,000,000 15,000,000 10,000,000 45,000,000 100,000,000

P RESENT ISSUE
No. of shares 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: Allocation to Institutions/HNWIs Investors through book building mechanism* General Public** Total Present Offer Grand Total Face value (Rs.) Premium (Rs.) Total(Rs.)

7,500,000 2,500,000 10,000,000 20,000,000

75,000,000 25,000,000 100,000,000 200,000,000

Nil Nil Nil Nil

75,000,000 25,000,000 100,000,000 200,000,000

*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 total Issue) with an additional green shoe option of up to 2.5 million ordinary shares at a price of PKR 10 per share (the Strike Pri ce Determined through the Book Building Process). Notes:
(i) (ii) (iii)

The Sponsors of the Company shall retain at least twenty-five percent of the capital of the Company for a period of five years from the date of public subscription; 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; The Company with the approval of shareholders by way of special resolution in general meeting held 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 against exercise 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 the Commission 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: Extent of the Option: Exercise Price: Consideration: Exercise Period: Particulars of the person to whom the Options have been given: Up to 10% of the post IPO paid up capital of the Company or two million shares, whichever is lower; PKR 10/- per share Cash Five years and six months after one year from the date of listing of the Company on the Karachi Stock Exchange. 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

a) b) c) d) e)

(iv) (v)

In case there is any contradiction between the contents of the Prospectus and the Stock Option Agreement, the disclosures made in the prospectus shall prevail; The unexercised options granted by the Company to Mr. Najam Ali, Chief Executive Officer of the 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 P UBLIC SUBSCRIPTION P ERIOD


The 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 P UBLIC ISSUE


Eligible investors include: a) Pakistani citizens resident in or Outside Pakistan or persons holding two nationalities including Pakistani 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 Deed and existing regulations); and e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

3.4

FACILITIES AVAILABLE TO NON-RESIDENT PAKISTANI AND FOREIGN INVESTORS


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 be entertained. (b) The amount of application for subscription of 500 ordinary shares is PKR 5,000 (Issue price x 500 shares). (c) Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which 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 BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS MONEY SHALL BE LIABLE TO CONFISCATION 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 be accommodated. (f) If the shares applied for are in excess of the shares offered to them, the distribution shall be made 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 shall be 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 available for 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. If all applications for 500 shares and 1,000 shares have been accommodated and shares are 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. If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated 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 be accommodated then balloting will be conducted among applications for 2,000 shares only.

III.

IV.

(g) After the allotment in the above mentioned manner, the balance shares, if any, shall be allotted in the following manner: I. If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and the remaining shares shall be allotted on pro rata basis. If the remaining shares are not sufficient to accommodate all the remaining applications for at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each of the successful applicants.

II.

(h) If the Issue is oversubscribed in terms of amount only then the allotment of shares shall be made on the following basis: I. II. III. IV. First preference will be given to the applicants who applied for 500 shares; Next preference will be given to the applicants who applied for 1,000 shares; Next preference will be given to the applicants who applied for 1,500 shares; and then; 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 be allotted 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 will be 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 APPLICANTS


The 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 of the 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 SHARES

3.7.1 P HYSICAL 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 SYSTEM The 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 P RECEDING YEARS


No. of Shares 4,000 5,996,000 4,000,000 10,000,000 Par Value (PKR) 10 10 10 Amount (PKR) 40,000 59,960,000 40,000,000 100,000,000 Consideration Cash Cash Cash Date of Issue 14-12-2009 21-12-2009 29-01-2010

3.9

P RINCIPAL P URPOSE OF THE P UBLIC ISSUE


The 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 SHAREHOLDERS None 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 P OLICY The 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 DIVIDEND The 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 ZAKAT Income 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 W ITHHOLDING TAX ON DIVIDENDS Dividend 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 First 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 TAX Capital 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 more than six months less than six months but less than 12 months 10.0% 7.5% 10.0% 8.0% 12.5% 8.5% 15.0% 9.0% 17.5% 9.5%

S. No. 1 2 3 4 5

Tax Year 2011 2012 2013 2014 2015

more than one year 0% 0% 0% 0% 0%

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3.16 DEFERRED TAXATION Deferred 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 all deductible 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 or subsequently 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/P URCHASE OF SHARES Under 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 W ITHHOLDING TAX ON SALE/P URCHASE OF SHARES 0.01% 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 IPO Under 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 ENLISTMENT Under 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 listed on a Stock Exchange in Pakistan. 3.21 RATIONALE FOR FIXING FLOOR P RICE OF PKR 10 ABOVE BREAK UP VALUE The 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 CULTURE

NCL 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 of well 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 VALUE

Because NCL was formed post the market crash of 2008, its business model has been developed keeping the 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 GROWTH


Since 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

4.1

UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES


UNDERWRITING BOOK BUILDING P ORTION
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.

P UBLIC 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 Silkbank Limited Pak Oman Investment Company Limited Pak Brunei Investment Company Limited TOTAL Shares Underwritten 1,000,000 1,000,000 500,000 2,500,000 Amount (PKR) 10,000,000 10,000,000 5,000,000 25,000,000

4.2

BUY BACK/REPURCHASE AGREEMENT


THE 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 COMMISSION
Book 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 ISSUE


Commission 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

BROKERAGE
For 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 by the underwriters by virtue of their underwriting commitments.

4.6

ESTIMATED EXPENSES TO THE ISSUE


Expenses to the Issue are estimated not to exceed PKR 10.517 million. The breakup of these preliminary expenses is given below: Expenses Underwriting Commission Book Building Underwriting Commission General Public Take up Commission Book Building* Take up Commission General Public* Bankers to the offer (Book Building) Commission Brokerage to Members of the Stock Exchange Bankers to the offer (Public portion) Commission Printing, Publication and notice Costs Advisory & Underwriting arrangement fee KSE Fees and Listing Charges KSE Software Charges CDC Charges SECP Application and Processing Fee Legal & Professional Fees Balloting Agent Marketing Expenses Miscellaneous Cost Total Rate 1.5% 1.5% 2.00% 2.00% 0.50% 1.00% 0.50% Amount (PKR) 1,125,000 375,000 1,500,000 500,000 375,000 1,000,000 125,000 1,000,000 1,500,000 417,500 250,000 200,000 50,000 100,000 500,000 1,000,000 500,000 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

5.1

HISTORY AND PROSPECTS


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 SPONSORS i. MR. MUHAMMED NAJAM ALI (CHIEF EXECUTIVE OFFICER NEXT 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 asset management company in the private sector. Mr. Najam was also the founding Chief 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 KHAN

Dr. 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 KHAN EXECUTIVE 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 STRUCTURE
NCLs organogram is given below:
CEO

Business Functions Corporate Finance Trading Equity Market

Settlement

Operations

Admin And Support Systems Research

Administration

Finance

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5.4

P RODUCTS & SERVICES EQUITY BROKERAGE i. INSTITUTIONAL BASED BUSINESS

NCLs present emphasis has been to penetrate the brokerage industry, utilizing its relationship strengths through the institutional business. Since starting broking operations in April 2010, the Company has already been enlisted as a broker on the panels of most of the financial institutions in Pakistan. This includes leading asset management companies, development finance institutions, insurance companies and banks. Major clients of NCL include; Faysal Bank Limited, Faysal Asset Management Limited, JS Investments, NICT, KASB Asset Management HBL Funds, UBL Funds, Allied Bank, NAFA Funds, BMA Funds, Meezan Bank Limited, The Bank of Punjab, MCB Bank, United Bank Limited, etc. NCL has 43 major institutional clients and 130 individual clients.

ii.

HIGH NET W ORTH INDIVIDUALS

Going forward, NCL will focus on developing its High Net worth clients through provision of high quality investment advice. The Company has already been successful in attracting business from a number of high net worth individuals and is striving to increase its market share in this segment. The target market will be individuals with investment portfolios of PKR 5 million and above. The Company has earned a total revenue of PKR 41.61 million in the year ended 30th June 2011, comprises of a brokerage income of PKR 37.18 million (90% of the total revenue) and advisory/consultancy fee of PKR 4.43 million. However, the Company has posted a net loss of PKR 15.12 million during the same period.

iii. RETAIL SEGMENT ONLINE TRADING


The retail segment will be the main engine of growth for the brokerage operations in the future. This is a largely under-penetrated segment of the industry as compared to the institutional broking business. The Management feels that the retail investor has a strong need for structured investment guidance, which NCL aims to provide. In order to increase its presence in this segment, NCL plans on launching its on-line brokerage operations in the coming year.

EQUITY RESEARCH
NCL research function helps clients make better informed investment decisions and improve portfolio returns. Our flagship publication i.e. Investment Outlook combines analysis with strategy to guide equity investors in Pakistan. Because of our unwavering commitment to quality, we do not publish daily research reports but only when great investment opportunities arise. Reports are available on our website: www.nextcapital.com.pk .

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NCLs research team currently comprises 5 people with high profile educational backgrounds like LUMS, Oxford Brookes University, UK and Case Western Reserve University, USA and premier professional qualifications like CFA and ACCA. With an objective of championing the provision of unbiased, independent, and insightful research to its clients, NCLs research is the cornerstone of the companys futuristic strategy. As research will be serving the needs of equity, money market, and commodity brokerage, as well as helping fund managers in the investment advisory function, synergizing its activities will optimize the utilization of the department, whilst maintaining a strong revenue focus. Going forward, the Company plans to seek international joint venture partnership with a leading international firm in research. Presence of an international brand name will enhance the visibility and credibility of NCLs Research amongst both domestic and international fund managers which will in turn augment the prospects of business enlargement from both domestic and international fund managers.

Equity Market Research

Stock Selection

Equity Market Outlook

Coverage

Key Sectors

Asset Allocation

CORPORATE FINANCE & ADVISORY


With a strong team of CF & A professionals, NCL has already created a name for itself within Pakistans Investment Banking space, having worked on some of the big-ticket transactions emanating in Pakistan within the last year. NCL was the buy-side financial advisor in the successful acquisition of Shell Gas LPG (Pakistan) by OPI Gas (Private) Limited and is currently Advisor and Manager to the Offer for Ashmore Investment Management Limited on the prospective acquisition of Agritech Limited. Furthermore, the Investment Banking team at NCL is currently working on mandates with an approximate value of PKR 5.0 billion (USD 50 million +). The services were provided by NCL to OPI Gas (Pvt.) Ltd. in the year 2010. The firm provides full-scale investment banking services to its clients.

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A list of the various services provided by the CF & A department are given below:

The Sponsors believe that there is significant scope in Pakistans investment banking activities. In particular, there is an urgent need for consolidation in some key sectors; commercial banking, investment banking, asset management, leasing, and cement to name a few. In the future, it is believed that business economics will dictate a wave of mergers and acquisitions in these sectors. Also, the sponsors and the management believes that most of the new IPPs set up will shortly initiate a wave of power sector Initial Public Offerings. Furthermore, in the wake of 2008 financial crisis, there is a substantial demand for debt re-structuring with leading corporations. By maintaining a strong CF & A focus, NCL aims to fully capitalize on these opportunities to develop a fuller deal pipeline in the future. 5.5

FUTURE P ROSPECTS
As part of its broad vision of being a full scale financial services firm, NCL plans to undertake new initiatives which will increase shareholder value in a direct and indirect manner. Under the leadership of Mr. Najam Ali, the Company sponsors envisage NCL as a leading player in the financial services sector within the next three years. Potential areas of future expansion include the following:

I.

INVESTMENT ADVISORY

NCL plans to initiate its Investment Advisory business in early FY12 .The Company will focus on two main market segments for Investment Advisory business, i.e. institutional and high net worth individuals. Investment Advisory business in Pakistan is largely unstructured. Broadly speaking, there will be two account types; discretionary accounts and non-discretionary accounts. Investment advice will be provided by qualified professionals across a broad range of asset classes including equities, debt, and commodities.

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NCLs research department would cater to the data and research requirements of the Investment Advisory team. The portfolio advisory process will be tailor made based on the Investor Policy Statement of each client. The investment advisory segments revenues are two-pronged i.e. Brokerage Fees based on brokerage commission generated through clients activity ii) Performance Fees based on the performance of the clients portfolios
i)

NCL also plans to set-up a mutual fund distribution function within wealth management, which will augment revenues.

II.

MONEY MARKET BROKERAGE


NCL plans to commence the money market operations starting FY12. As part of the Companys vision to become a full service financial services firm, the company realizes the importance of fixed income investments in an investors asset allocation. Thus, a money market desk is important to cater to clients fixed income investment needs. Institutional money market brokerage is not a very high revenue generating business. However, the area with immense potential is that of the retail fixed income brokerage, including treasury bills, PIBs, and TFCs. NCL plans to bring fixed income trading capability to the retail investor through an integrated online trading platform. This will allow clients to manage their short-term liquidity, as well as make long term asset allocation decisions.

III.

COMMODITY TRADING

NCL plans to initiate commodities brokerage in early 2012, based on the commodities being traded at the Pakistan Mercantile Exchange (PMEX, formerly known as National Commodities Exchange Limited). Commodity trading is a buzzword at the moment, due to the strong outperformance of commodities as an asset class in the recent past. Commodity trading is still a very new concept to Pakistan with sizeable volumes only in gold, silver, and oil futures. However, as the product offerings at the PMEX improve, volumes will also continue to increase. Currently, PMX offers trading facilities for the following products: gold, silver, palm oil, crude oil, rice, and interest rate futures. The sponsors and management envisage that the commodity brokerage clientele will comprise of institutional investors in the form of commodity funds, companies looking to hedge their exposure to commodity price volatility, and retail investors desiring investment in this asset class. NCL plans to offer an integrated online trading platform, whereby the Clients would not only be able to view their portfolio positions through a click of the button but also be able to trade through a single platform. Going forward, NCL also plans to add fixed income to this platform. This would provide NCL with an unparalleled edge amongst the brokerage community. Investor education in commodity investing is required. As the amount of leverage provided is large, investors need to be shown the potential risks involved. Trading discipline needs to taught, and NCL envisions playing a major role in developing investor education in the commodity asset class.

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5.6

RISK FACTORS
COMPANY SPECIFIC RISKS RISKS DESCRIPTION MITIGANTS Next Capital strives to have a diversified client base, so that its dependenc e on institutional clients is lessened. For client base please refer to para 5.3(i). No mitigant exists for dilution in shareholding with the exercise of the stock option. However, the effect of dilution will be insignificant and the exercise of the option would reflect confidence in the Company enabling shareholders to benefit from the future growth. The Company seeks to negate this risk by providing superior service to its clients and by keeping an efficient and lean cost structure. This risk is mitigated by maintaining a healthy current ratio. Furthermore, post IPO, the company will have a high exposure limits due to a large net capital balance. The company seeks to mitigate these risks by putting in place strong internal financial and operational systems, an efficient Back Office Support System, exposure limits at the senior trading terminals, and by engaging a Compliance Officer with a mandate to monitor compliance with the regulatory requirements. The Company has a Compliance officer nominated in accordance with the requirements of Circular 34 of 2009 issued by the Securities and Exchange Commission of Pakistan. His roles and responsibilities include ensuring effective implementation and compliance with the Regulatory Framework. The Company seeks to mitigate these risks by not overly relying on any one source of revenue. Diversification of the revenue base is the means by which Next Capital seeks to mitigate this risk. Also, NCL is engaged in other business and plans to engage in further businesses to mitigate the risk. Currently, NCL is offering Corporate Finance Services.

Clients

Risk of Low Client Base

Dilution

Risk of dilution incase of Stock Option exercised by Mr. Najam Ali. For instance, if Stock Option will be exercised to the maximum of 2 million shares, the dilution will be 8.16% of the total paid up shares 1 of 24.5 million . Risk of decline in the market share of the Company due to other players in the market. Risk that NCL is not able to pay its current liabilities

Competition

Liquidity

Operational

Risk of adverse change in the infrastructure of the Company that will result in deterioration of the operations of the company, eventually further increase the losses of the Company.

Capital Market

Risk from relying only on brokerage income from trading on behalf of the clients.

Assuming 12.5 million new sha res (including 2.5 million green shoe option) under IPO & 2 million shares under Stock Option

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Business

Risk that overall exposure increases which might result in default both at client as well as companys end.

The Company expec ts to mitigate these risks by employing adequate risk management measures to ensure that exposure remain within prudent limits. Pakistan has witnessed a continued phase of economic growth, supported inter alia, by continuity in investment & economic growth friendly policies. This regime is expected to continue and adverse shift in the regulatory and policy framework is considered unlikely. After the IPO, a sizeable portion of 50% of the post IPO paid up capital would be owned by the outside investors. Since the free float of the Company would be high therefore the liquidity risk in the market will be minimized. The risk of price fluctuation is directly related with the demand & supply in the stock market. Ther efore this risk mitigates when the stock market moves in an upward direction. The government through various measures has been trying to curtail this risk, making the investment climate suitable for investors.

Regulatory Risks

Changes in the regulatory framework can greatly influence the perfor mance of the Company.

Liquidity Risk

That is the risk that investors might face difficulty in selling the shares in the market.

Price Risk

The risk exist if the market price of the scrip goes down, hurting the investment of investors. Risk of law & order due to any unforeseen event in the country.

Law & Order Risk

NOTE: IT IS STATED THAT ALL MATERIAL RISKS FACTORS, WITH RESPECT TO THIS ISSUE, HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN CONCEALED.

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PART 6

6.1

FINANCIAL INFORMATION
AUDITORS REPORT UNDER SECTION 53(1) READ WITH CLAUSE 28 OF SECTION 2 PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984, FOR THE PURPOSE OF INCLUSION IN THE P ROSPECTUS OF N EXT CAPITAL LIMITED

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6.2

AUDITORS CERTIFICATE ON ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY

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6.3

SHARE BREAK-UP VALUE CERTIFICATE

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MANAGEMENT NOTE: The revised break-up value of the Company on the basis of post-IPO paid up capital, as at 30th June 2011, is given below: Issued, subscribed & paid up capital Accumulated losses Total shareholder's equity Number of ordinary shares Break-up value per share of Rs. 10 each 6.4 200,000,000 (17,600,792) 182,399,208 20,000,000 9.12

Rupees

Rupees

SUMMARY FINANCIAL HIGHLIGHTS


Next Capital Limited Balance Sheet Projections All Figures in PKR Fixed Assets Current Assets Total Assets Total Liabilities Equity Profit / (Loss) Before tax Profit/ (Loss) After Tax

FY2011 A 87,305 38,956 126,262 43,863 82,399 (17,503) (15,125)

6.5

FINANCIAL RATIOS
Next Capital Limited Key Ratios FY2011 Profitability Ratios Operating Margin PAT Margin Return on Equity (ROE) Return on Capital Employed (ROCE) Liquidity Ratios Current Ratio Other Ratios Loss per Share Book Value per Share -52% -53% -18% -15%

1.47

(1.51) 8.24

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6.6

UNAUDITED ACCOUNTS FOR THE QUARTER ENDED 30TH SEPTEMBER 2011

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PART 7

7.1

MANAGEMENT
BOARD OF DIRECTORS OF THE COMPANY
S. No. Name & Address Designation (CEO/Director) Directorship in other Companies

Faisal Ali Asghar House No. 124, Ahmed Block, New Garden Town, Lahore. Muhammad Najam Ali House No. 161, Main Khayaban-e- Hafiz, Phase # 6, D.H.A., Karachi. Muhammad Zulqarnain Mahmood Khan 2-A, Race View Road, Lahore. Hanna Khan House No. 161, Main Khayaban-e- Hafiz, Phase # 6, D.H.A., Karachi Sana Quadri G-21/5 Friends Garden, Block-B, North Nazimabad, Karachi. Muhammad Zubair Ellahi House# 4 Modern Housing Society, Shaheed-e-Millat Road, Karachi. Shahrukh Ali Raza Mirza House No. 35, Main Khayaban-eMujahid, DHA Phase 5, Karachi, 75600.

Director

- Dalia Securities Private Limited - Republic Engineering Corporation (Pvt.) Limited - Dupak Developers Pakistan (Pvt) Limited MCB Financial Services Limited

CEO / Director

Director

None

Director

None

Director Director / Company Secretary

None

None

Director

Windmolen (Pvt.) Limited

7.2

OVERDUE LOANS
The company has no overdue loans.

7.3

P ROFILE OF KEY MANAGEMENT P ERSONNEL


Next Capitals senior management and investment professionals have diverse backgrounds with extensive industry experience. The Company has a dynamic, streamlined and entrepreneurial organizational structure with a management team having several years of experience in the industry.

I.

MR. MUHAMMAD NAJAM ALI CHIEF EXECUTIVE OFFICER


Please refer to section 5.2(i)

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II.

MR. ZULQARNAIN MAHMOOD KHAN EXECUTIVE DIRECTOR (HEAD OF SALES)


Please refer to section 5.2(vi)

III. MR. ZUBAIR ELLAHI CHIEF FINANCIAL OFFICER & COMPANY SECRETARY Mr. Zubair Ellahi has over 20 years of rich experience of working in multiple capacities in Pakistans capital markets. Prior to joining NCL, Mr. Zubair served as a Director at Bhayani Securities Limited (BSL) where he was instrumental in transforming the sole proprietorship to a top rated corporate brokerage house. While at BSL Mr. Zubair served in numerous capacities which included all areas of the business. His responsibilities have ranged from transforming the company from a sole proprietorship to a public unlisted company to heading the sales desk. Over his 17 year tenor at BSL, Mr. Zubairs responsibilities have included managing a portfolio of over Rs. 200 million, establishing BSLs institutional, foreign and high net worth client sales desk and establishing BSLs research department and initiating coverage of multiple sectors and companies. Mr. Zubair is a graduate from the Institute of Business Administration (IBA) with a Masters in Business Administration (MBA).

IV.

MR. AKMAL JAMEEL , CFA SENIOR ADVISOR, INVESTMENT BANKING


Mr. Akmal Jameel is a seasoned finance professional with over 20 years of broad-based emerging market experience. He has a deep understanding of private equity and real estate investments, corporate financial advisory and privatization structuring. His past positions have included Chief Executive of a private equity and venture capital firm and a Senior Vice President in the Corporate Finance & Advisory practice of Arif Habib Securities Limited. He also had governance and strategic planning responsibilities as a director on the boards of 11 corporate entities. Mr. Jameel is a graduate of London School of Economics with a Masters of Science in International Accounting and Finance and is a Chartered Financial Analyst (CFA) charter holder.

v.

SYED MUHAMMAD KAMRAN, ACCA


Syed Kamran has diverse professional experience that spans across multiple domains like audit and assurance, financial and investment analysis and financial advisory. Currently, he is working as Head of Research at Next Capital covering fertilizer and power sector stocks. Previously, he was associated with the Financial Advisory Services of Deloitte Pakistan as Senior Consultant where his responsibilities comprised projects on business valuations, corporate finance, mergers & acquisitions and business, accounting and management consulting. Kamrans prior research experience includes working in the Equity Research at Summit Capital (previously Atlas Capital Markets) where his responsibilities included coverage of fertilizer, power and oil marketing sectors, economic research and equity strategizing for retail clients.

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Mr. Kamran has two professional qualifications i.e. ACCA and CFA. He also holds a B.Sc. Honors (Applied Accounting) from Oxford Brookes University, UK.

VI.

MR. AKIF GHUMRA HEAD OF INFORMATION TECHNOLOGY


Mr. Ghumra, a seasoned Information Technology (IT) professional, is heading the IT department at Next Capital and has over 13 years of relevant experience. Before joining Next Capital Limited, Mr. Ghumra was Head of Information Technology at Alfalah Securities (Pvt.) Ltd for 6 years, a leading financial services firm in Pakistan He has also served at Application Xs (Pvt.) Ltd as Chief System Architect and pioneered the development of online stock trading software in Pakistan. Major implementations included AKDTRADE, ECLTRADE, and FYSLTRADE. Mr. Ghumra has a double major from Hamdard University, majoring in Software Engineering and BiMajor Networks. In addition to this he has completed a two-year Diploma in computer Science, OCA (ORATECH Certified Analyst) and E-Commerce Solution Developer Diploma from NED University. Mr. Ghumra is affiliated with International Association of Business Process Management Professional (ABPMP) and served as Vice President Finance for the Pakistan Chapter. He is also associated with International Association of Software Architects as President of the Pakistan Chapter.

7.4

PROFILE OF DIRECTORS
I. MR. FAISAL ALI ASGHAR
By profession, Mr. Faisal is an engineer and has served as a consultant in projects involving multistory commercial building at Fane Road Lahore, Fauji Foundation Teaching Hospital Rawalpindi, POF Medical College WAH and NHA Building. Further, he has served as a consultant in OGDC House Islamabad and D. G Khan Cement Factory at D. G Khan. Mr. Faisal is a Graduate from Ohio State University USA, and holds a Masters Degree from Lahore University of Management Sciences. II.

MR. MUHAMMAD NAJAM ALI CHIEF EXECUTIVE OFFICER


Please refer to section 5.2(i)

III.

MR. ZULQARNAIN MAHMOOD KHAN EXECUTIVE DIRECTOR (HEAD OF SALES)


Please refer to section 5.2(vi)

IV.

MS. HANNA KHAN- DIRECTOR


Mrs. Hanna Khan has worked with the Fidelity Investment Bank in Lahore.

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She is a graduate of Kinnaird College and has completed her Masters in Public Administration from Punjab University. V.

MS. SANA QUADRI


Ms. Quadri is serving as Director & Finance Manager at NCL. She has joined the Company in July 2011. Previously, she was associated with A.F. Ferguson & Co., Chartered Accountants (a member firm of PricewaterhouseCoopers) in the Assurance and Business Advisory Services (ABAS) group for around four years. During her tenure, she remained on different assignments with Companies like Unilever Pakistan Limited, ICI Pakistan Limited (AkzoNobel), Hinopak Motors Limited, Excel Pakistan (Pvt.) Limited (DHL Group), etc. She has also served in Munaf Yusuf & Co., Chartered Accountants as Audit Manager where she was also a part of the Internal Monitoring Process of the firm. Ms. Quadri is a qualified Chartered Accountant and a member of the Institute of Chartered Accountants of Pakistan (ICAP).

VI.

MR. ZUBAIR ELLAHI CHIEF FINANCIAL OFFICER & COMPANY SECRETARY


Please refer to section 7.3(iii)

VII. MR. SHAHRUKH ALI RAZA MIRZA Mr. Mirza is an experienced Entrepreneur and Business Development executive with demonstrated expertise in launching start-up companies/acquiring sick units and rehabilitating them for equity spin offs. During his career, Mr. Mirza successfully concluded several high-end projects including a USD 1 million project on time and within budget; exclusivity service contract with a local tracker company to offer EVAC services in Pakistan as a value addition product to the end user of their auto insurance product within 3 months of launch having a worth of USD $200,000 etc. He was also associated with JS Investments Limited in the fund management side and Darson Securities as Head of Investments. He holds a Bachelor of Arts, Business Administration degree from Clark University, USA. 7.5

NUMBER OF DIRECTORS
Pursuant to Section 174 of the Companies Ordinance, 1984 the Company shall not have less than seven directors. At present the Board consists of 7 Directors excluding the Chief Executive.

7.6

QUALIFICATION OF DIRECTORS
Pursuant to the Article 89 of Articles of Association of the Company The qualification of an elected director, in addition to his being a member, where required, shall be his holding share of the nominal value of Rs. 5,000 at least in his own name, but a director representing the interests of a member or members holding share of the nominal value of Rs. 5,000 at least shall require no such share qualification. A director shall not be qualified as representing the interests of a member or members holding shares of the requisite value unless he is appointed as such representative by the member or members concerned by notice in writing addressed to the company specifying the shares of the requisite value appropriated for qualifying such director. Shares thus appropriated for qualifying a director shall not, while he continues to be such representative, be appropriated for qualifying any other director. A director shall

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acquire his share qualification within two (2) months from the effective date of his appointment as director. 7.7

REMUNERATION OF DIRECTORS
Pursuant to Clause 87 of the Articles of Association of the Company, any director who serves on any committee or who devotes special attention to the business of the company, or who otherwise performs services which in the opinion of the directors are outside the scope of the ordinary duties of a director, may be paid such extra remuneration as the directors may determine from time to time. The remuneration of a director for attending meetings of the board shall from time to time be determined by the directors. Pursuant to Clause 87 of the Articles of Association of the Company, each director of the company may, in addition to any remuneration receivable by him, be reimbursed his reasonable travelling and hotel expenses incurred in attending meetings of directors or of the company or otherwise whilst employed on the business of the company. Pursuant to Clause 85 of the Articles of Association of the Company, a chief executive of the company shall receive such remuneration as the directors may determine and it may be made a term of his appointment that he be paid a pension and / or gratuity and /or other benefits on retirement from his office. In addition to the gross salary, the Chief Executive is paid an annual cash bonus in the range of 30-50% of the gross salary. Besides, he is also entitled to other benefits as per companys policy including companys matching contribution towards provident fund of up to 10% of the basic salary, one months gross salary for every completed year of service as gratuity, company maintained transport with driver, medical and hospitalization expenses. Further, an amount equal to one years gross salary shall be paid to him in case of termination before June 11, 2013. No pension is payable to him on retirement. The remuneration of a director for attending meetings of the board has not been determined by the directors as such no fee is being paid to the directors presently for attending the meetings of directors.

7.8

BENEFITS TO THE P ROMOTERS AND OFFICERS


No amount of benefits has been paid or given during the last year or is intended to be paid or given to any promoter or to any officer of the Company other than as remuneration for services rendered as wholetime executive of the Company and the remuneration for services shall be borne by the Company.

7.9

INTEREST OF DIRECTORS
The directors may be deemed to be interested to the extent of fees payable to them for attending Board meetings. The Directors performing whole time service to the Company may also be deemed interested in the remuneration payable to them from the Company. The Directors may also be deemed to be interested, to the extent of any shares held by each of them in the Company, the dividends to be declared on their shareholding in the Company.

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7.10 INTEREST OF DIRECTORS IN P ROPERTY ACQUIRED BY THE COMPANY None of the Directors of the Company have or had any interest in any property acquired by the Company or proposed to be acquired by the Company. 7.11 ELECTION OF DIRECTORS The directors shall subject to the provisions of Section 178 of the Companies Ordinance, 1984 fix the number of directors to be elected and the directors shall be elected to office by the members in general meeting in the following manner, namely: (a) a member present in person or by proxy shall have such number of votes as is equal to the product of voting shares held by him and the number of directors to be elected (b) a member may give all his votes to a single candidate or divide them between more than one of the candidates in such manner as he may choose, and (c) the candidate who gets the highest number of votes shall be declared elected as director and then the candidate who gets the next highest number of votes shall be so declared, and so on until the total number of directors to be elected has been so elected. If the number of persons who offer them to be elected as directors is not more than the number of vacancies for which elections are being held, such persons being otherwise eligible shall be deemed to have been elected as directors from the date on which the election was proposed to be effective. The present Directors of the Company were elected on for the period of three (3) years except for Mr. Shahrukh Ali Raza Mirza and Miss Sana Quadri who have been appointed to fill in the casual vacancy for a period of up to 16th May 2014 and 10th March 2014: Name of Directors Mr. Najam Ali Mr. Faisal Ali Asghar Mr. Shahrukh Ali Raza Mirza Ms. Hanna Khan Ms. Sana Quadri Mr. Muhammad Zubair Elahi Mr. Zulqarnain Mahmud Khan 7.12 VOTING RIGHTS The rights and privileges, including voting rights, attached to the ordinary shares of the Company are equal. 7.13 AUDIT COMMITTEE/CONSTITUTION OF AUDIT COMMITTEE The following are the members of the Audit Committee: 1) Mr. Muhammad Najam Ali (Chairman) 2) Mr. Faisal Ali Asghar 3) Mr. Muhammad Zubair Ellahi Appointment Date 30th October 2010 30th October 2010 29th December 2011 10th March 2011 06 January 2011 10th March 2011 30th October 2010

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7.14 INTERNAL AUDIT The company shall establish a separate internal audit function in accordance with the requirements of Code of Corporate Governance immediately after the listing of its securities on the Stock Exchange. 7.15 BORROWING P OWERS The Directors may from time to time at their discretion borrow and secure the payment of any sum or sums of money for the purposes of the Company and may themselves lend to the Company on security or otherwise subject to the provisions of the Companies Ordinance, 1984. 7.16 P OWER OF DIRECTORS The business of the Company shall be managed by the Directors, who may pay all expenses incurred in promoting and registering the Company, and may exercise all such powers of the Company as are not by the Ordinance or any statutory modification thereof for time being in force, or by the Articles of Association, required to be exercised by the Company in General Meeting. 7.17 INDEMNITY Clause 183 of the Company's Article of Association reads as follows: "Every director or officer of the company and every person employed by the company as auditor shall be indemnified out of the funds of the company against all liability incurred by him as such director, officer or auditor in defending any proceedings, whether civil or criminal, in which judgment is given in his favour, or in which he is acquitted, or in connection with any application under section 488 of the ordinance in which relief is granted to him by the court." 7.18 INVESTMENT IN ASSOCIATED COMPANIES The Company has not made any investment in any of associated companies nor has any resolution been passed for investment in associated companies under Section 208 of the Ordinance. 7.19 INVESTMENT IN SUBSIDIARIES The Company has not sponsored nor acquired any subsidiaries nor has any resolution been passed for sponsoring or acquiring any subsidiaries under Section 208 of the Ordinance.

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PART 8

8.1

MISCELLANEOUS INFORMATION
REGISTERED OFFICE/CORPORATE OFFICE
8th Floor, Horizon Tower Plot No. 2/6, Block 3 Clifton Karachi, Pakistan Tel: +92 21 35292629-26 Fax: +92 21 35292633 URL: www.nextcapital.com.pk E-mail: info@nextcapital.com.pk

8.2

BANKERS TO THE ISSUE FOR BOOK BUILDING


Summit Bank Limited

8.3

BID COLLECTION CENTRE


Karachi Attn: Mr. Waqar Ahmed Room# 419, Stock Exchange Building I. I. Chundrigar Road, Karachi. Tel: +9221 32429664-67 Fax: +9221 32413822 Email: info@abaalihabib.com Lahore Attn: Mr. Zulqarnain Mahmood Khan Room No. 416, 4th Floor Siddiq Trade Centre 72 Main Boulevard Gulberg Lahore. Tel: +9242-35781940-41 Fax: +9242-35781942 Email: zulqarnain.khan@nextcapital.com.pk Islamabad Attn: Ms. Sidra Khalid 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: sidrakhalid@summitbank.com.pk asifraza@summitbank.com.pk

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8.4

MAJOR BANKS OF THE COMPANY


JS Bank Limited MCB Bank Limited Bank Alfalah Limited Askari Bank Limited

8.5

AUDITORS OF THE COMPANY


M/s. KPMG Taseer Hadi & Co. Chartered Accountants First Floor, Sheikh Sultan Trust Building No. 2 Beaumont Road Karachi 75530 Tel: +92 (021) 3568 5847 Fax: +92 (021) 3568 5095 E-mail: pk-fmkarachi@kpmg.com

8.6

BANKERS TO THE ISSUE


Bank Alfalah Limited Bank Al-Habib Limited Deutsche Bank AG Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited JS Bank Limited MCB Bank Limited Summit Bank Limited The Bank of Punjab United Bank Limited

8.7

LEGAL ADVISOR OF THE COMPANY


Salman & Niazi: Barrister at Law & Corporate Consultants Salman Rahim (Senior Partner) Office 2, 1st Floor, SAF Centre, 8-Fane Road, Lahore, Pakistan. Phone: +92 42 373636 11 22 - 33 Fax: +92 42 373636 99 Email: salman@snn.com.pk

8.8

LEGAL ADVISOR TO THE ISSUE


Mohsin Tayebaly & Co. 2ndFloor, Dime Centre, BC-4 Block 9, Kehkashan, Clifton, Karachi-75600. Pakistan.

8.9

BOOK RUNNER
ABA ALI HABIB Securities (Pvt.) Limited Room# 419, Stock Exchange Building I. I. Chundrigar Road, Karachi. Tel: +9221 32429664-67

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Fax: +9221 32413822 Email: info@abaalihabib.com 8.10 LEAD MANAGER Arif Habib Limited Arif Habib Centre 23 M.T.Khan Road Karachi. Tel: +92 21 3241 5213-15 Fax: +92 21 3242 9653 www.arifhabibltd.com 8.11 SHARES REGISTRAR Technology Trade (Pvt.) Limited Dagia House, 241-C Block 2, P.E.C.H.S, Off. Shahra-e-Quaideen, Karachi. Phone: 3439 1316-7 Fax: 3439 1318 8.12 MATERIAL CONTRACTS/DOCUMENTS Extract of the Option Agreement dated October, 7th, 2011 (Agreement) made and entered into at Karachi by and between Next Capital Limited (Company) and Mr. Muhammad Najam Ali For restrictions and some salient features of the Stock Option Agreement, please see Note No. (iii) and (iv) in para 3.1. 1. Option: [Subject to the approval of SECP pursuant to the first provision to section 86(1) of the Companies Ordinance, 1984,]2 the Company has granted to Mr. Muhammad Najam Ali a right and an option without the obligation (Option) to subscribe to such number of ordinary shares in the capital of the Company (Shares) as are equal to the Available Percentage (defined below) of the issued and paid up Shares (Option Shares) on the date on which notice of exercise of the Option for those shares is given to the Company. The option was granted by the shareholders of the company by way of Special Resolution, in the Annual General Meeting held on September 13, 2011 and any increase in the capital of the Company pursuant to an issue of shares under the option is subject to approval of SECP. 2. Consideration for the Option: The Option has been granted as an incentive and not in lieu of salary or any other compensation for services, in consideration and recognition of Mr. Muhammad Najam Ali having provided invaluable services and assistance towards the establishment and starting of the operations of the Company. 3. Name, address, description and occupation of the Optionee: Mr. Muhammad Najam Ali s/o Syed Farman Ali Jafri, bearing NIC # 35202-3033271-9, is one of the sponsors and the Chief Executive Officer of the Company.
2

These words will not be required if the SECP approval is granted before the prospectus is published

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Mr. Muhammad Najam Alis address is: Office: 8th Floor Horizon Tower, Plot # 2/6, Block III, Clifton, Karachi He is currently the registered owner of four (4) million Shares of the Company. 4. Who may exercise the Option: The Option may be exercised in whole or in part and from time to time on or by the Expiry Date (defined below) by Mr. Muhammad Najam Ali or, in the event of his death or disability, by Mrs. Hanna Khan, a relative nominated by Mr. Ali. 5. Number, description and amount of the Option Shares: The term Available Percentage means the percentage equal to 10% less the aggregate of all Subscribed Percentages, if any. The term Subscribed Percentage means the percentage which the Shares subscribed through and issued as a result of an Option exercise notice given to the Company comprise of the issued and paid up Shares on the date on which that exercise notice is given to the Company. Illustration*: - Existing Share Capital - Capital to be raised through IPO - Book Building Mechanism - General Public Portion - Green Shoe Option part of General Public portion - Share Capital post IPO Rs. Rs. Rs. Rs. Shares - Maximum Shares to be issued under Option - Share Capital post exercise of Option Shares Rs. Shares - Dilution in the shareholding upon exercise of option 75,000,000 25,000,000 25,000,000 225,000,000 22,500,000 2,000,000 245,000,000 24,500,000 Rs. 100,000,000

8.16%

*The above illustration is meant for the understanding of the Option. The Share Capital and the number of Shares allotted under Option can vary depending on the circumstances (for instance; i) Time and extent of the exercise of option,ii) further issue of shares through right or otherwise, if any and iii) other unforeseen circumstances) of the case.

6. Period during which the Option is exercisable: The Option exercise notice must be given during the period starting from the date of listing on the Karachi Stock Exchange of the Shares (Commencement Date) and ending on the day falling 5 years and 6 months after the Commencement Date (Expiry Date), both dates included.

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7. Price to be paid for the Option Shares: The Option for the Option Shares is exercisable by payment of consideration calculated at the rate of PKR 10 per Share in respect of which the Option is exercised and such consideration will be payable in cash, bank draft or bank pay order. 8. Procedure to be followed by the Company: The Company will issue Option Shares directly into the CDS sub-account or investor account nominated in the relevant Option exercise notice, within 5 business days of receiving the relevant Option exercise notice and the consideration for such Option Shares (calculated at the rate of PKR 10 per Share) in the form of cash, bank draft or bank pay order payable to the Company. 9. Other terms: Neither the Option nor any other right, privilege, benefit or interest vested or conferred in relation thereto in or on Mr. Muhammad Najam Ali shall in any manner be prejudiced or impaired, nor shall the agreement granting the Option in any manner terminate or be limited (a) by any listing of the Shares, or (b) if Mr. Muhammad Najam Ali is not the Chief Executive Officer, director or other officer, employee or sponsor of the Company at any time, whether during, before or after the period starting from the Commencement Date and ending on the Expiry Date, both dates included. 10. The Option Shares shall not be regarded as rights Shares for the purposes of section 86(1) of the Companies Ordinance, 1984 and, accordingly, the Company is authorized not to offer the Option Shares to the shareholders of the Company in proportion to the existing Shares held by each shareholder and, in this regard, will seek the relevant approval of the SECP pursuant to Section 86(1) of the Companies Ordinance, 1984. 11. Approvals: [The Option has been granted subject to the approval of the Securities and Exchange Commission of Pakistan pursuant to the first proviso to section 86(1) of the Companies Ordinance, 1984. The Company has made an application to SECP for such approval. 12. The Company has entered into an agreement dated 7th October 2011 with Mr. Muhammad Najam Ali which reflects the aforesaid terms. 8.13 UNDERWRITING AGREEMENTS Names of the underwriters Silkbank Limited Pak Oman Investment Company Limited Pak Brunei Investment Company Limited 8.14 DUE DILIGENCE REPORTS Names of the underwriters Silkbank Limited Pak Oman Investment Company Limited Pak Brunei Investment Company Limited Date 24 Feb. 2012 24 Feb. 2012 24 Feb. 2012 No. of Shares underwritten 1,000,000 1,000,000 500,000 Amount (PKR) 10,000,000 10,000,000 5,000,000 Date 24 Feb. 2012 24 Feb. 2012 24 Feb. 2012

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8.15 OTHER CONTRACTS


Description Loan Agreement with related parties Loan Agreements Others Total Loan Agreements 7.5% Annually Term 02 years 02 years Rate 6M KIBOR + 4% 18% Annual Increase Facility Amount (PKR) 8,500,000 5,000,000 13,500,000 3,279,180 Annual +32,984 monthly maintenance charges 2,400,000 Annual +240,000 maintenance charges 360,000 90,377 monthly repayments 6,039,180 annual + 363,361 monthly payments Amount Outstanding (PKR) 8,500,000 5,000,000 13,500,000

Rental Agreements Software & Software Maintenance Network Service Agreement Car Lease from BoP Total Service/Rental Agreements

03 years Lifetime Annual 05 years

16.29%

Nil Nil Nil 2,590,242 2,590,242

8.16 INSPECTION OF DOCUMENTS AND CONTRACTS Copies of Memorandum and Articles of Association, Audited Financial Statements of the Company, Auditors Certificates, Agreements / Material Contracts referred to in this Prospectus and related information may be inspected during the usual business hours on any working day at the Registered Office of the Company, from the date of publication of this Prospectus till the closing of subscription list. 8.17 LEGAL P ROCEEDINGS There are no legal proceedings pending in the Court of Law which may have adverse material impact on the business of the Company. 8.18 MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alias, sets forth the objects for which the Company was incorporated and the business, which the Company is authorized to undertake. A copy of the Memorandum of Association is annexed to this Prospectus and has been published with all issues thereof except those released as newspaper advertisement. 8.19 FINANCIAL YEAR OF THE COMPANY The financial year of the Company commences from 1st day of July and ends on the 30th day of June each year.

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PART 9

9.1

APPLICATION AND ALLOTMENT INSTRUCTIONS


ELIGIBLE INVESTOR INCLUDES:
a. b. c. Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality; Foreign Nationals whether living in or outside Pakistan; 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); Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing regulations); and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

d. e. 9.2 9.3

APPLICATIONS MUST BE MADE ON THE COMPANYS PRINTED FORM


Copies of this Prospectus and applications forms can be obtained from members of Karachi Stock Exchange (Guarantee) Limited, the Bankers to the Issue and their Branches, the Lead Manager & Book Runner, and the registered office of the Company. The Prospectus and the application form can also be downloaded from the following website: www.abaalihabib.com, www.arifhabibltd.com and www.nextcapital.com.pk. The applicants opting for scrip less form of shares are required to complete the relevant sections of the application. In accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such shares is allowed ONLY in the applicants own CDC account. In case of discrepancy between the information provided in the application form and the information already held by CDS, the Company reserves the right to issue shares in physical form. Name(s) and address (es) must be written in full block letters, in English and should not be abbreviated. All applications must bear the name and signature corresponding with that recorded with the applicant's banker. In case of difference of signature with the bank and Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport both the signatures should be affixed on the application form.

9.4

9.5 9.6

9.7

APPLICATIONS MADE BY INDIVIDUAL INVESTORS


(i) In case of individual investors, an attested photocopy of CNIC (in case of Resident Pakistanis)/Passport (in case of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC/Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal/Provincial Government Gazetted Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicant's residence. (ii) Original CNIC/Passport, along with one attested photocopy, must be produced for verification to the banker to the Issue and the applicant's banker (if different from the banker to the Issue) at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application.

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9.8

APPLICATIONS MADE BY INSTITUTIONAL INVESTORS


(i) Applications made by companies, corporate bodies, mutual funds, provident/pension/gratuity funds/trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument/document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal/Provincial Government Gazetted Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School or bank manager in the country of applicant's residence can attest copies of such documents. (ii) Attested photocopies of the documents mentioned in 8(i) must be produced for verification to the banker to the Issue and the applicant's banker (if different from the banker to the Issue) at the time of presenting the application. The attested copies, will after verification, be retained by the bank branch along with the application.

9.9 9.10

Only one application will be accepted against each account, however, in case of joint account, one application may be submitted in the name of each joint account holder. Joint application in the name of more than two persons will not be accepted. In case of joint application each applicant must sign the application form and submit attested copies of their CNICs/Passport. The Shares will be dispatched to the person whose name appears first on the application form while in case of CDS, it will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit or return. Please note that joint application will be considered as a single application for the purpose of allotment of Shares. Subscription money must be paid by cheque drawn on applicant's own bank account or pay order/bank draft payable to one of the Bankers to the Issue A/C INITIAL PUBLIC OFFERING OF NEXT CAPITAL LIMITED and crossed A/C PAYEE ONLY. For the applications made through pay order/bank draft, it would be permissible for a banker to the Issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order/bank draft individually for each application. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of Shares. Applications are not to be made by minors and/or persons of unsound mind. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form. Applicants should retain the bottom portion of their application forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of Shares for which the application has been made. Making of any false statements in the application or will fully embodying incorrect information therein shall make the application fictitious and the applicant or the bank shall be liable for legal action.

9.11

9.12

9.13

9.14 9.15 9.16

9.17

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9.18

Bankers to the Issue are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the bankers to the Issue. It would be permissible for a Banker to the Issue to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers. Submission of Fictitious and multiple applications (more than one application by same person) is prohibited and such applications money is liable to confiscation under section 18A of the Securities and Exchange Ordinance, 1969. ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS

9.19

9.20

9.21

In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant's letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of memorandum of association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager in the country of applicant's residence. Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistan's Foreign Exchange Manual. BASIS OF ALLOTMENT 1. The minimum amount of application for subscription of 500 Shares is PKR 5,000/-. Application for Shares below the total value of PKR 5,000/- shall not be entertained. 2. Application for Shares must be made for 500 Shares or in multiple thereof only. Applications, which are neither for 500 Shares nor for multiple thereof, shall be rejected. 3. Allotment/Transfer of Shares to successful applicants shall be made in accordance with the allotment criteria/ instructions disclosed in the Prospectus. 4. Allotment of Shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and/or the instructions by the Securities & Exchange Commission of Pakistan. 5. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form. 6. The Company will dispatch Shares to successful applicants through their Bankers to the Issue or credit the respective CDS accounts of the successful applicants (as the case maybe).

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Bankers to the Issue Code No. 01 02 03 04 05 06 07 08 09 10 11 Bank Bank Alfalah Limited Bank Al-Habib Limited Deutsche Bank AG Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited JS Bank Limited MCB Bank Limited Summit Bank Limited The Bank of Punjab United Bank Limited

Code of Occupation Code No. 01 02 03 04 05 Nationality Code Code No. 001 002 003 004 005 Name of Country U.S.A. U.K. U.A.E. K.S.A. Oman Code No. 006 007 008 009 Name of Country Bangladesh China Bahrain Other Occupation Business Business Executive Service Housewife Household Code No. 06 07 08 09 10 Occupation Professional Student Agriculturist Industrialist Others

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PART 10

BIDDING FORM OF NEXT CAPITAL LIMITED


(This space has been left blank intentionally)

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PART 11

SIGNATORIES TO THE PROSPECTUS


Sd/------------------------------Muhammad Najam Ali Sd/------------------------------Muhammad Zulqarnain Mahmood Khan Sd/------------------------------Shahrukh Ali Raza Mirza Sd/------------------------------Faisal Ali Asghar Sd/------------------------------Muhammad Zubair Ellahi Sd/------------------------------Hanna Khan Sd/------------------------------Sana Quadri

Signed by the above in the presence of witnesses: Sd/------------------------------[] CNIC Address: Date: Place: Sd/------------------------------[] CNIC Address: Date: Place:

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PART 12

MEMORANDUM OF ASSOCIATION

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