Engro sells Rs1 billion certificates

The asset-backed issue TFC is for a period of three years offering a return of 14.5 per cent.

KARACHI: Engro Corporation has said that it has so far sold Rs1 billion of its Rupiya Certificates and expressed the hope that the initial target of Rs2 billion will be met.

Engro had launched the certificates on October 15 in a bid to target retail investors and gather funds to meet expansion requirements of its fertiliser and food businesses.

The asset-backed issue called Term Finance Certificates (TFC) is for a period of three years offering a return of 14.5 per cent.

“We have received Rs1 billion for the paper in 10 days and hopefully the target of Rs2 billion will be achieved,” said Hafsa Shamsie, Manager Finance Engro Corporation.

“Most of the investors are individuals compared to institutions,” she said, who were attracted by the lucrative 14.5 per cent return.

The size of the TFC, which are available at 11 banks and TCS outlets with a minimum investment of Rs25,000, is Rs4 billion.

Of that amount, the initial offer is worth Rs2 billion and a green shoe option of another Rs2 billion.

Head of Equity Research at BMA Capital, Hamad Aslam, agreed that the subscription of certificates is expected to reach Rs2 billion, but meeting the green shoe option of another Rs2 billion will be challenging.

Hamad said investors may go towards government-guaranteed National Savings Certificates, which offers a return of 12 to 12.5 per cent, instead of the corporate certificates because of the risk involved in the latter.

Published in The Express Tribune, November 2^nd, 2010.