Is Tapal worth $1 billion?
About one in every three cups of tea consumed in Pakistan is using Tapal Tea. As a brand, it is one of the most well-known names in the country, a market leader in a category that touches everyday consumption in virtually every single household in Pakistan. In a country with a thriving capital market, such a company would either already be public, or its choice to remain private would be an anomaly. In Pakistan, however, Tapals decision to remain private is entirely within the norm. News hit the wires this past week that Pakistans equity markets are on the verge of being downgraded by the global benchmark provider MSCI from its Emerging Markets Index to its Frontier Markets Index. This is as opportune a time as any to ask: what is it about the Pakistani capital markets that keeps some of the countrys biggest, most prominent corporate names from becoming publicly listed on the Pakistan Stock Exchange. Unlike most other pieces that will address this question this week, we decided to use a real case study: Tapal, a company that is probably worth a lot of money and, by some admittedly aggressive valuation methodologies, may even be worth more than $1 billion. Yes. Yes, it is. But now that we have your attention, please do read on.)