A small shareholder of TRG Pakistan has obtained a stay order from Islamabad High Court that restrained Greentree Holdings from purchasing a significant further stake in TRG.
Greentree Holdings, the largest shareholder of TRG Pakistan with a 29.7% stake, had launched on January 15 a tender offer for a further 35.1% shareholding in TRG Pakistan, representing foreign exchange inflows of $55 million into the country.
Book closure for the tender took place on February 21 and tender open dates are from March 6 to 12.
However, on February 26, Signsource Limited, a 0.3% shareholder in TRG Pakistan and Abid Hussain, a director of the company and the CEO of Signsource, got a stay order from the high court.
The stay order is part of a writ petition filed by Karachi-based Signsource against the Securities and Exchange Commission of Pakistan (SECP), TRG Pakistan, Greentree Holdings and others in Islamabad High Court. It alleged that the purchase of shares by Greentree was in violation of Pakistan's securities law and said the purchase should be stayed until the next date of hearing.
Market participants have reacted with dismay to the news of the stay as the tender provided an exit option to the 13,000-plus shareholders of TRG Pakistan at a 25% premium to the pre-tender price, in addition to remitting much-needed foreign exchange to the country.
Greentree Holdings is an offshore vehicle set up by TRG to remit to the shareholders of TRG Pakistan the proceeds of monetisation of its various assets.
In 2022, $86 million of the proceeds of sale by TRG of US-based eTelequote were remitted back via the purchase of shares by Greentree in TRG Pakistan. The 2025 tender, valuing at up to $55 million, appears to have been a continuation of that remittance process, funded from the proceeds of the recent partial sale of TRG's stake in Nasdaq-listed IBEX Limited.
Market analysts have expressed concern over the ability of a small shareholder to disrupt the inflow of foreign exchange into the country.
They added that the stay may set a damaging precedent for small shareholders to disrupt some of the most fundamental capital market functions of a publicly listed company, such as dividends, buybacks or tenders, severely shaking the confidence of investors.
Since the tender announcement in the middle of January, over 200 million shares of TRG Pakistan with transaction value of over Rs13 billion have changed hands on the Pakistan Stock Exchange, all with the knowledge and expectation of the upcoming tender purchase.
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