Pakistan’s leading fashion retail brand Khaadi is facing additional regulatory scrutiny ahead of its proposed listing on the Pakistan Stock Exchange (PSX). The Securities and Exchange Commission of Pakistan (SECP) has requested further disclosures regarding the company’s financial statements, business operations, share valuation and proposed expansion plans.
According to a report by ProPakistani, citing sources familiar with the matter, SECP officials have held discussions with Khaadi representatives and sought clarification on several aspects of the company’s draft initial public offering (IPO) prospectus.
One of the major areas requiring additional information involves Khaadi International’s franchise operations and its experience-oriented retail stores operating in different cities. The regulator wants a clearer understanding of the company’s business structure and the financial arrangements behind these operations.
SECP has also questioned the proposed face value of Khaadi’s shares and asked the company to provide a detailed explanation of its valuation methodology. The clarification is considered important for potential investors who will need sufficient information to assess the company’s financial position before participating in the IPO.
The regulator has reportedly raised questions about several financial disclosures in Khaadi’s audited accounts and draft prospectus. These include property valuations, intellectual property rights and the assumptions used to determine the company’s overall share value.
According to the reported details, Khaadi’s audited financial statements for December 2025 showed a loss of approximately Rs. 1.5 billion. However, gains arising from the revaluation of investment properties reportedly helped offset the impact of the loss.
SECP has sought further explanations regarding the property valuation exercise, including the valuation report and assumptions used to determine the assets’ worth. Questions have also emerged over the difference between property revaluation gains recorded in the 2025 accounts and those reported in the previous year.
Another important area concerns the valuation of Khaadi’s intellectual property rights. The regulator reportedly wants the company to explain the assumptions used by its valuer, GT, and the methodology applied to determine the share premium.
The company’s proposed retail expansion strategy has also attracted attention. SECP is seeking more detailed information about the expected investment required for new outlets, projected revenue from individual stores and actual financial performance of locations opened during the first half of 2026.
These disclosures could help investors understand whether the company’s expansion plans are financially sustainable and how the additional investment is expected to contribute to future revenue.
The proposed utilisation of IPO proceeds is another issue requiring clarification. The regulator wants Khaadi to explain how the funds raised through the public offering will be spent and what safeguards will protect shareholders if the sponsors decide to change their original plans.
Questions have also been raised about minority shareholder protection, particularly regarding the influence of the company’s sponsors over important corporate decisions.
A separate concern involves Khaadi’s reported acquisition of certain brand-related rights from its parent company for approximately Rs. 8 billion. SECP reportedly wants more information about the agreement, the transaction price and the valuation methodology used to determine the amount.
The draft prospectus refers to a valuation conducted by GT, while the company’s audited accounts describe the transaction as having been negotiated between the parties. The regulator is seeking clarification about these details to ensure investors receive a transparent explanation of the arrangement.
Khaadi Pakistan Limited is a subsidiary of Weaves Corporation Limited. The company has been preparing to enter the capital market through a combination of pre-IPO placement and a public share offering.
According to the draft IPO prospectus previously published for public comments, Khaadi proposed offering 250 million shares through the public offering at a floor price of Rs. 12.40 per share, with a maximum price of Rs. 18. The company also planned a separate pre-IPO placement involving another 250 million shares.
Together, these transactions could generate up to Rs. 8.3 billion, subject to the final pricing and completion of the offering.
The company intends to use the funds to support its retail expansion programme and repay bridge financing obtained for earlier capital expenditure. Its strategy includes developing larger Experience Stores to enhance the shopping experience and strengthen its presence in existing markets.
Khaadi operates a network of retail outlets in Pakistan and international markets, alongside its online shopping platform. The brand has also been expanding its product range beyond traditional clothing into accessories, home products and other lifestyle categories.
The additional questions from SECP highlight the importance of financial transparency, accurate asset valuations and investor protection as Khaadi moves closer to its proposed stock market debut.
The company’s responses and any resulting changes to its prospectus will be important for investors seeking to understand its financial health, business strategy and valuation before the IPO process moves forward.