KARACHI: During the month of August, net foreign portfolio inflow into the equity markets amounted to a tall order of $51 million.
Much of that, however, was ‘off market’ transactions in two companies: The first of around $6.0 million worth shares in Bata (Pakistan) and second, the $30 million equity in Colgate-Palmolive. While the shares in Bata (Pakistan) were purchased by the Parent Bata (Nederland) BV, whose ultimate parent is Compass Limited Bermuda; the buyer in Colgate-Palmolive stock was not identifiable except that it was an ‘emerging market consumer fund’.
The market men are cherishing the deals as a good omen, for a foreign inflow in ‘blue chip’ companies suggests overseas investors’ confidence in the country’s ability to deliver high yields on investment and the prospects of good growth in corporate profitability.
“While we lament the departure of foreign sponsors from Hub Power Company and ICI, the entry of overseas investors in other companies should be happy augury,” says a market participant.
Analysts who track foreign portfolio trend in equity market say that the Bata’s parent has been continuously collecting shares from the market.
On Dec 31, 2010, the Nederland-based shoe maker's controlling stake in Pakistan subsidiary was 4.5 million shares, representing 60pc of the company’s paid-up shares of 7.56 million.
By the close of financial year to Dec 31, 2011, Bata (Netherlands) N.V had scaled its stake to 5.10 million shares or 67 per cent of the total. In August this year, the parent bought another 0.588 million shares from the market in ‘off-market transactions’, adding 7.8pc to its controlling shares, which rose to 75 per cent. There is, however, some concern among market participants on the price of deals.
A market watcher said that a brokerage house had acquired 0.578 million shares in the ‘off-market’ deal at Rs920 per share from NBP, the second biggest shareholder in Bata (Pakistan) with 1.77 million shares or 23 per cent of the paid-up capital.
From the figures of ‘off-market transactions’ posted on the KSE site, it looks like the buyer (or intermediary) held on to the stocks for a couple of days and filled the overseas parent’s order in two separate ‘off-market’ transactions on Aug 29 and 30 at Rs1,000 per share. Did some one, then pocket the difference of Rs80 per share and make a cool Rs46 million in the deal in less than a week?