SECP Investigates SE Fruits IPO Over Financial Irregularities

The book-building process for the company’s IPO had already been suspended, while the SE Fruits company subsequently withdrew its existing application

KARACHI: Regulator flags material discrepancies in prospectus as company withdraws IPO application and plans fresh filing with additional disclosures; all investors have been refunded.

The Securities and Exchange Commission of Pakistan (SECP) has launched an inquiry into the initial public offering (IPO) of SE Fruits and Vegetable Limited after identifying significant financial discrepancies in the company’s prospectus, raising questions about disclosure standards and the reliability of financial information presented to prospective investors.

According to an SECP statement, the book-building process for the company’s IPO had already been suspended, while the company subsequently withdrew its existing application. The regulator confirmed that all investors’ funds had been refunded.

The development comes as SE Fruits and Vegetable Limited, formerly known as Shaheen Enterprises, prepares to submit a fresh IPO application with additional disclosures concerning the transition of its underlying business from a partnership operating since 1998 to a newly incorporated public limited company in 2026.

SECP flags financial discrepancies

In its statement, the SECP said significant financial discrepancies had emerged in the company’s prospectus, which was prepared using information contained in its audited financial statements.

The regulator explained that prospectuses are approved on the basis of information supplied by companies, while investors rely on audited financial statements and disclosures when making investment decisions.

The commission also stressed that making false or misleading statements constitutes an offence under the Securities Act.

Emphasising the importance of financial transparency and investor protection, the SECP highlighted the need for a reliable audit system and called for strengthening the Audit Oversight Board to improve the credibility of financial reporting.

The inquiry is expected to examine the issues surrounding the disclosures and the financial information presented in the IPO documents.

Company plans fresh IPO application

In a statement, SE Fruits and Vegetable Limited said its board of directors had decided to withdraw the existing IPO application and submit a fresh one after incorporating additional disclosures into the prospectus.

The company said the revised document would provide further information about the transition of the underlying business from a partnership organisation, which had been operating since 1998, to the newly incorporated public limited company in 2026.

According to the company, the decision was taken in the interests of transparency, regulatory compliance, investor protection and informed investment decision-making.

SE Fruits maintained that the withdrawal was a procedural step rather than an abandonment of its plans to enter Pakistan’s capital markets.

The company said it remained committed to listing on the Pakistan Stock Exchange (PSX) and intended to reapply after completing the revised prospectus and fulfilling the applicable regulatory requirements.

Sources familiar with the matter told Business Recorder that the withdrawal followed concerns over disclosures that had not been adequately incorporated into the IPO documents. The sources said the omissions came to the attention of regulators, prompting the company to resubmit its application with the required information.

Company profile and financial performance

SE Fruits and Vegetable Limited is a Punjab-based horticulture exporter specialising in mangoes, citrus fruit, particularly kinnow, and potatoes, along with other agricultural produce.

The company, formerly known as Shaheen Enterprises, has been preparing to become the first fresh fruit and vegetable company to list on the Pakistan Stock Exchange through an IPO.

According to the financial figures provided, the company reported net revenue of Rs2.133 billion in fiscal year 2026 and profit after tax of Rs303.8 million. Its topline stood at approximately $7.6 million, including export revenue of around $4 million.

The company also reported that it had remained debt-free since FY2024. Despite its presence in the horticulture export market, its share of Pakistan’s national fruit and vegetable exports was less than 2% in FY2026.

IPO intended to raise up to Rs1.92 billion

The proposed IPO was designed to raise between Rs1.2 billion and Rs1.92 billion to support the company’s expansion and operational requirements.

The planned use of proceeds included funding working capital, expanding processing capacity and export operations, and establishing international offices in the United Arab Emirates and Uzbekistan.

The company also intended to invest in enterprise resource planning (ERP) systems, asset-tracking technology and solar energy to strengthen its operational infrastructure and support future growth.

However, the withdrawal of the existing application means the company must complete the revised disclosures and applicable regulatory process before proceeding with a fresh filing.

Focus on transparency and investor protection

The case has highlighted the importance of complete and accurate disclosures in public offerings, particularly when an established business transitions from a partnership structure to a newly incorporated public limited company.

Such disclosures are important because prospective investors assess a company’s financial position, operating history and business structure when deciding whether to subscribe to an IPO.