KARACHI – The country’s capital market witnessed its first over-the-counter (OTC) market listing as the fertiliser giant, Engro Fertilisers Limited (EFL), floated private commercial papers worth Rs 1.0 billion at Karachi Stock Exchange (KSE) to raise proceeds from the corporate sector to cater its working capital requirements.
The KSE Wednesday enlisted the EFL’s first ever security on OTC market by listing of the privately placed commercial papers valued at Rs 1.0 billion under the over-the-counter market regulations of the local bourse.
“The commercial papers is being listed under schedule III of the regulation relating to listing of debt market securities issued to qualified institutional buyers through private placement,” the KSE notified the stakeholders Wednesday.
Through the fresh private issuance, which has a 6-month maturity period with effective and profit rates standing respectively at 14.14 percent and 6-month KIBOR + 1.25 percent per annum, the fertiliser giant will be raising the targeted amount from the corporate institutions.
Eligible buyers include commercial banks, non-bank financing and insurance companies, mutual, provident and pension funds and others. “The proceeds from the issue are being used to finance the working capital requirements of the company,” said the EFL which, with a total asset base of Rs 85.7 billion, made a profit after tax of Rs 2.0 billion during first half of 2010.
To be listed at KSE on January 17, the commercial papers would be put forward from January 18 on the basis of negotiated deal while the settlement of trade would be taking place on counter party basis.
Engro, the KSE said, had appointed JS Global Capital as a market maker to quote the bids spread for the “unsecured” papers on daily basis.
The market maker would inform the KSE and the Issuing and Paying Agent (IPA), Transfer Agent and trustee, JS Bank Limited, of any trade in the instrument. This would be available through the website of the exchange under the market information menu item as “OTC scrips”.
The fertiliser producer said that at maturity, the IPA will effect payment of the face value of the instrument to instrument holders upon presentation of the original note at the counters of the agent.
The purpose of the OTC Market is to provide investors with an efficient and transparent source of investment, besides encouraging the promoter to establish new industries or expand existing enterprises by raising funds in a cost-effective manner in a listing regime where requirements are less stringent.
