Engro Polymer’s shares oversubscribed by 5.4 times

KARACHI: Engro Polymer and Chemicals saw its preference shares oversubscribed by more than five times during an initial public offering mid of this month, the company said on Wednesday.

The listing of the shares will take place on Thursday (today).

The shares were offered through fixed price method at an issue price of Rs10 per share. Out of the 300 million preference shares, 262.5 million preference shares or 87.5 percent were offered to and subscribed by the pre-IPO investors, whereas 37.5 million preference shares or 12.5 percent were offered to the general public. Applications for more than 202 million shares were received from the public. The general public portion of the IPO has been oversubscribed by 5.39 times or by more than 164.547 million shares or Rs1.6 billion.

Jahangir Piracha, the company’s CEO said timely closure of the pre-IPO of preference shares issue and the immense oversubscription received in public offering reflects a continued investor confidence in the business.

Engro Polymer had planned to raise Rs3 billion for the expansion of the company’s poly-vinyl-chloride capacity and debottlenecking of vinyl chloride monomer production capacity. The total cost of the proposed expansion was estimated at Rs7.6 billion, of which Rs5.4 billion was funded through issuance of ordinary shares by way of right offer in 2018 and the remaining cost was funded through debt.

However, due to the onset of the Covid-19 pandemic and the ensuing lockdown, the target completion of the project was delayed and the estimated completion date had to be revised to 1Q 2021 from the earlier set date of 3Q 2020. This delay resulted in the cost increase of the expansion project to Rs11.9 billion.

Farrukh Khan, MD and CEO of Pakistan Stock Exchange said the IPO has brought a new investment instrument for investors and portfolio managers.

Shahid Ali Habib, the CEO of Arif Habib Limited said the IPO has been oversubscribed 5.4x with broad based participation from institutional, corporate and retail investors.