PACRA Assigns Initial Rating to Select Technologies Limited – Term Finance Facility – PKR 3.3bln – Jun-26

Select Technologies Limited (“Select”) issued its first Syndicated Islamic Term Finance Facility of PKR 3,300mln, with the first drawdown of ~PKR 1,950mln on June 30th, 2026, forming the larger tranche of a PKR 4,764mln syndicated Islamic facility arranged by The Bank of Punjab, with PKR 1,464mln allocated to parent Airlink Communication Limited, which has been drawn fully. Both sub-facilities are cross-collateralized and subject to cross-default provisions. The facility will carry a floating profit rate of 3M KIBOR + 115bps, a ten-year tenor inclusive of a one-year grace period, and principal repayable in up to thirty-six equal quarterly instalments with profit payable quarterly in arrears. Proceeds finance Airlink and Select’s manufacturing facility at Sundar Green Special Economic Zone (SGSEZ), Lahore. The assigned rating draws comfort from the credit enhancement extended through an InfraZamin Pakistan Limited (IZP) guarantee, covering 75% of outstanding principal, and a layered security structure, alongside the borrower’s standalone credit profile. In the event of non-payment, primary recourse is first to the DPA and DSRA, with the guarantee invoked only upon exhaustion of the DPA at the relevant instalment due date. Security is multi-tiered, comprising pari passu mortgages over three acres at SGSEZ and fixed/current assets, cross-corporate and personal guarantees, and an irrevocable sponsor support undertaking covering all Project Account shortfalls. Payment certainty is supported by four dedicated Project Accounts, including an IZP-exclusive GPA. The Collection Account maintains 1.0x annual revenue coverage, with funds applied to the DPA/GPA, then DSRA, while the DPA is funded monthly and the DSRA maintained at 1x upcoming quarterly principal. Select is Pakistan’s licensed Xiaomi smartphone manufacturer with an annual mobile phone assembly capacity of ~2.7mln units on a single shift. During 7MCY26, local production declined by ~3.4% YoY to 17mln units, comprising ~9mln 2G phones and ~8mln smartphones, while commercial imports rose sharply (~92% YoY) to 2.66mln units. In line with broader industry trends reflected in PTA statistics, the Company reported net sales of ~PKR 31,559mln in FY26 (FY25: ~PKR 48,893mln). Despite the softer topline performance, profitability improved materially across all levels. Financial risk profile of the Company remains adequate, supported by improving profitability and demonstrated market access. However, higher borrowing costs, elongated working capital cycle, and execution risk attached to expansionary capex remain monitorable factors. Going forward, the management remains committed to comply with agreed gradual de-leveraging plan and financial discipline.
Sustained compliance with a pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the planned deleveraging strategy, supported by optimal deployment of syndicated financing and IPO proceeds, along with the successful market penetration of newer product categories and scale-up of the SGSEZ facility, prudent liquidity management, and efficient working capital discipline, shall remain imperative.

About the Entity
Select Technologies Limited was incorporated in Pakistan on October 13, 2021 as a private limited company. The Company was listed on the Pakistan Stock Exchange (PSX) on July 13, 2026, with Airlink remaining its majority shareholder.

About the Instrument
Select portion forms part of a PKR 4,764mln syndicated Islamic facility arranged by The Bank of Punjab, BankIslami Pakistan, Askari Bank, and Pak China Investment Company, with PKR 1,464mln allocated to the parent. The sub-facilities are cross-collateralized and subject to cross-default provisions. Proceeds finance Select’s SGSEZ manufacturing facility at 3M KIBOR + 115bps, with a ten-year tenor, one-year grace period, and repayment in up to 36 equal quarterly instalments.