Engro Corporation has sold over 28 per cent of its shareholding in Engro Fertilizers, Pakistan’s second largest fertilizer 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 per cent of the total outstanding shares of Engro Fertilizers, at a price of Rs 65.47 per share.
Engro Corporation owned as many as 78.8 per cent of over 1.3 billion outstanding shares in Engro Corporation at the beginning of 2016. Its shareholding in its fertilizer manufacturing subsidiary has been reduced to 56.6 per cent 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.
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 per cent 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 per cent shares in Engro Foods, a subsidiary that contributed more than a quarter in the corporation’s revenues last year.
The share price of Engro Corporation gained Rs3.27 on Tuesday, up almost 1% from the last day’s closing price to trade at Rs 350.50 a share at 10:45am.