Term finance certificates: Sold out!

Engro’s Rupiya certificates reach Rs4 billion target days before deadline for subscription.

KARACHI: Engro’s Rupiya certificates seem to have become a hit among investors since Rs4 billion worth of certificates have been sold out, days before the deadline for subscription. “This includes a green shoe issue of Rs2 billion, which will be listed and traded on the Karachi Stock Exchange (KSE),” informed Engro Finance Manager Hafza Shamsie.

On Wednesday, KSE announced the launch of its over-the-counter market for commercial paper. Officials stated that Rs1 billion worth of commercial paper issued by Engro Fertiliser will be the first privately held one to be traded on the platform.

An official release issued by the company said that 80 per cent of the amount invested in the certificates came from individual investors. “The initial plan had been to raise Rs1 billion through this issue but due to the popularity of the certificates, we decided to increase the target,” Engro Vice President Public Affairs Tahir Jawaid told The Express Tribune.

The certificates, launched on October 14, 2010 were specifically targeted towards small retail investors who hold no more than one per cent of the total market share, according the company spokesperson.

“This is the first debt issue of this magnitude to directly tap the general public,” pointed out KASB analyst Hamza Marth. “The avenue has now been opened for other companies to emulate the model and raise funds through such offers.”

The massive appeal took some splurging from the home grown giant. Engro partnered with 15 distributors to set up 2,200 touch points to market its certificates. “Not every company can spend as much as Engro did on such a campaign,” highlighted Marth.

“But not every company will look to access this quantum of funding. The bottom line is, it can be done,” he concluded.

Published in The Express Tribune, January 14^th, 2011.