KARACHI: Engro Corporation has sold over 28% of its shareholding in Engro Fertilizers, Pakistan’s second largest fertiliser-manufacturing company, to institutional and high net worth individuals in a private placement worth approximately $185 million.
In a securities filing on Wednesday, Engro Corporation said it sold 295 million shares, which constitute 22.1% of the total outstanding shares of Engro Fertilizers, at a price of Rs65.47 per share.
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Engro Corporation owned as many as 78.8% of over 1.3 billion outstanding shares in Engro Corporation at the beginning of 2016. Its shareholding in its fertiliser-manufacturing subsidiary has been reduced to 56.6% following the transaction.
Engro Corporation did not state the reason for the share sell-off. However, analysts say the deal is part of the holding company’s strategy under which it is gradually steering away from non-energy businesses to focus on power-related projects.
“The proceeds… are expected to finance the equity need of the ongoing Thar mining and power projects,” said BMA Capital Management analyst Sajjad Hussain.
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Engro Corporation is one of the largest conglomerates operating in the country with interests in energy, fertilisers, petrochemical, food, trading and chemical storage. As much as 47.8% of Engro Corporation’s total revenues in 2015 originated from its fertiliser unit while the contribution of power businesses in the company’s top line was 7%, according to Bloomberg data.
Engro Corporation has recently been selling its stakes in non-energy businesses to raise cash for onward investments in energy-related businesses. For example, it recently began negotiations with a Dutch company, Royal FrieslandCampina NV, for the sale of up to 51% shares in Engro Foods, a subsidiary that contributed more than a quarter in the corporation’s revenues last year.
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The share price of Engro Corporation gained Rs3.27 on Tuesday, up almost 1% from the last day’s closing price to trade at Rs350.50 a share at 10:45am.
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