Engro Fertiliser’s IPO shelved temporarily

Parent company expected to generate capital to pay-off subsidiary’s loan.

Express August 16, 2011

KARACHI: After not a very successful initial public offering of Engro Foods, the company decided to delay its fertiliser IPO plan.

The company may offer shares of the largest profit-making subsidiary to the general public in early 2012, according to an InvestCap research note.

Given that the stock price of Engro has plummeted significantly amid current gas supply concerns, the company deems it not an appropriate time for the offering, analysts said. The company’s stock price fell Rs1.26 to close at Rs126.78 at the Karachi Stock Exchange on Tuesday.

However, Engro Powergen’s IPO is on track and three to four weeks away, the company’s management told analysts in a briefing recently.

Engro Corporation earlier planned to list three of its subsidiaries – Engro Foods, Engro Fertilizer and Engro Powergen Qadirpur – at local stock exchanges this year.

The size of Powergen’s IPO is expected to offload 10 to 15 per cent of its holding.]

The parent company Engro Corporation sold around 27 million shares out of the company’s 748 million shares to raise around Rs675 million.

The amount raised through the listings will be mainly used for payment of fertiliser sector loans and expansion of the food business.

Worries regarding gas supply not easing

All four fertiliser plants relying on gas supply from Sui Northern Gas Pipelines Network network, including Engro Fertilizer’s EnVen plant, have so far received gas supply with 20-25% curtailment for 32 days in 3QCY11. Gas supply will be halted entirely from August 28 when Qadirpur gas field will be shut down for maintenance for 20 days, key hurdle for the fertiliser sector expansion.

Published in The Express Tribune, August 17th, 2011.