Engro Fertilizers conducts first phase of IPO successfully

Published: November 21, 2013

The shareholding structure is expected to be Engro Corporation (91.9%), book-building participants (4.3%), general public (1.4%) and divestment to local and international investors and HNWI (2.3%). PHOTO: FILE

KARACHI: 

The first phase of the initial public offering (IPO) of Engro Fertilizers concluded on Thursday, with as many as 410 bidders taking part in the book-building portion of what may arguably be the most anticipated public listing in the country’s recent history.

Engro Fertilizers is issuing 75 million ordinary shares at a floor price of Rs20 per share, which includes a premium of Rs10.

The money raised through the IPO will be utilised to fund development capital expenditures for securing additional gas supplies along of the balance sheet restructuring to optimise the company’s capital structure.

Only institutional investors and high net worth individuals (HNWI) were allowed to take part in the three-day book-building portion of the IPO, which involves 75% of the total issue size, or 56.25 million ordinary shares.

Speaking to The Express Tribune, AKD Securities Vice President for Investment Banking, Syed Khurram Shahid, said the offer’s book runners have determined the cut-off/strike price of Rs28.25 per share through the Dutch Auction Method, an auction structure in which the price of the offering is set after taking all bids and determining the highest price at which the total offering can be sold.

AKD Securities, along with Next Capital, is the joint book-runner for the issue. Habib Bank and Allied Bank are serving as financial advisers, lead managers and arrangers for the IPO.

“We expect the public subscription to be held by the middle of next month,” Shahid said, referring to the general public portion, which will consist of the remaining 25% of the total offer size. This means roughly 28.25 million ordinary shares will be issued to the general public at the rate of Rs28.25 per share, a price that has been determined through the book-building exercise.

The issue of 75 million ordinary shares constitutes 5.8% of the total post-IPO paid-up capital of the company. The book-building portion of the IPO has been oversubscribed by 3.9 times, according to Shahid. “The response from institutional investors and HNWIs has been overwhelming, even though the issue size was huge,” he said, adding that he expects the general public portion to be oversubscribed by many times as well.

With the establishment of a 1.3 million tons, state-of-the-art fertiliser complex in 2011, the company’s annual urea production capacity stands at 2.3 million tons, which is equal to one-third of the country’s total urea production capacity.

Engro Fertilizers has consistently faced gas supply shortages in recent years, which resulted in a net loss of Rs2.9 billion at the end of 2012. However, the company regained stability in the first half of 2013, as it posted a profit after tax of Rs1.4 billion at the end of the six-month period.

Apart from issuing 75 million new shares its parent company, Engro Corporation, will also divest up to 30 million shares− or 2.3% of post-IPO paid-up capital− out of its current holding at the strike price of Rs28.25.

Therefore, subsequent to the IPO and the divestment, Engro Fertilizers’ shareholding structure is expected to be Engro Corporation (91.9%), book-building participants (4.3%), general public (1.4%) and divestment to local and international investors and HNWI (2.3%).

Published in The Express Tribune, November 22nd, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

In an earlier version of this article the headline stated Engro, which is already a listed company,  instead of the full name Engro Fertilizers. The error is regretted. 

Reader Comments (22)

  • Muhammad Ali Farhan
    Nov 29, 2013 - 10:55AM

    Kindly define the Minimum Lot Limit for which the public can apply for this IPO.Recommend

  • Dec 15, 2013 - 4:38PM

    Minimum lot limit is 500 shares per person. And you can only buy in multiples of 500.

    Recommend

  • faysal
    Dec 15, 2013 - 6:14PM

    Hi ,

    is there any facility is provided to buy shares in bulk for pakistani living abroad?
    kindly advise

    thanks n rgds

    faysal

    Recommend

  • faysal
    Dec 15, 2013 - 6:15PM

    is there any facility to buy shares in bulk for pakistani living abroad?

    rgds
    faysal

    Recommend

  • Iqbal ahmed
    Dec 15, 2013 - 6:37PM

    I will suggest all of you that first study current balance sheet of engro fertilizer
    compare total debts and assets if possetive then its best opportunity,
    if negetive then ignore the offer.

    Recommend

  • ch iqbal
    Dec 16, 2013 - 12:47PM

    what is the market price per share of engro fertilizer pl update

    Recommend

  • ch iqbal
    Dec 16, 2013 - 12:50PM

    what is the market price per share of engro fertilizer

    Recommend

  • Belal Ilyas
    Dec 16, 2013 - 10:03PM

    Its 500 shares. @Muhammad Ali Farhan:

    Recommend

  • mansoor
    Dec 28, 2013 - 11:33AM

    hi i fill share form few days ago through hbl bank but i dont know about result.plz gave me link then i cann see result of ipo

    Recommend

  • yousuf
    Dec 29, 2013 - 3:01AM

    Sir
    I have filled engro IPO for 500 shares plz tell me when I got result and I applied for physical shares

    Recommend

  • abdul hannan
    Dec 31, 2013 - 7:30PM

    hi i fill share form few days ago through hbl bank but i dont know about result.plz gave me link then i cann see result of ipo

    Recommend

  • hassan raza
    Jan 1, 2014 - 12:00PM

    telll me the name of those people who got the shares of angro

    Recommend

  • hassan raza
    Jan 1, 2014 - 12:01PM

    tellll me the numbers of shares given to people

    Recommend

  • Jan 1, 2014 - 12:18PM

    i apply to purchased 4000 shares but i dnt knw hw much shares given to me i want to knw the list of candidates to whom u given the shares

    Recommend

  • Jan 1, 2014 - 12:27PM

    i apply 4000 shares and i dnt knw how much shares given to me please telll me the detail of shares holder

    Recommend

  • M.Faizan
    Jan 1, 2014 - 11:11PM

    Salam when will be the result announced??????

    Recommend

  • Rao Ashraf
    Jan 2, 2014 - 12:49PM

    i want to know when will be the result announcedRecommend

  • nasir khan
    Jan 4, 2014 - 11:52AM

    I want to know when will be the result announced

    Recommend

  • qaaa
    Jan 6, 2014 - 5:23PM

    result announcedRecommend

  • Adnan Qamar
    Jan 16, 2014 - 1:14AM

    i have same question when will be result announced if any one know about

    Recommend

  • Adnan Qamar
    Jan 16, 2014 - 1:16AM

    when result announce plz inform me through email:

    Recommend

  • Fawad Shah
    Jan 16, 2014 - 8:49PM

    @Azhar Ali:
    yes right but that is just fro REG; in ODL you can buy and sell equally even 1 share up to 499 shares lot.

    For best guidance and profits in Karachi Stock Exchange you all are welcome to join us on facebook @ https://www.facebook.com/kseprofessionals

    Recommend

More in Business