KARACHI, May 25: Engro Corporation — the food-to-fertiliser conglomerate, has received full subscription of Rs1.2 billion in 'International private placement' of shares of its wholly-owned subsidiary, Engro Foods. The amount has been placed by foreign as well as local investors, market sources said.

The private placement is a prelude to the Initial Public Offering (IPO) of Engro Foods that the company plans by the end of July. Engro Foods Limited currently waits on the 'Applied for Listing' section of the Karachi Stock Exchange. The prospectus/offer for sale would be open to public view after 'clearance' given by the exchange.

But reports suggest that 5 per cent shares of Engro Foods are to be floated to raise around Rs1.8 billion, which would enable food subsidiary of Engro to be separately listed on the stock exchanges.

Analysts said that the completion of private placement of a sizeable amount could indicate sustained interest of foreign and local investors in the company and more so in the country that is passing through tough political and economic conditions.

“For Engro Corporation, the cash that it is able to raise through the offer of food subsidiary shares (private placement and IPO) would help reduce debts and secure capital gains that would add to the company's profitability”, said an analyst. For the first quarter 2011 (1QCY11), Engro Corporation recorded consolidated profit- after-tax of Rs2,054 million, translating into earning per share (eps) of Rs5.22. It represented 9 per cent growth over Rs1,889 million (eps: Rs4.80) earned in the same quarter last year.

While fertiliser business contributed the biggest share of eps at Rs3.55, up 80 per cent from Rs1.97, Foods managed to earn Re 0.29 per share and jump out of red of Re 0.04 in 1QCY10.

During the quarter under review, the accounts for which were released at the end of April, Engro Foods revenue grew by 36 per cent to Rs6.4 billion and the benefit traveled down to the bottom line with profit- after-tax at Rs117 million as opposed to loss of Rs15 million posted in the same time last year.

“This was due to 19 per cent higher volumetric growth in UHT milk segment. Similarly, 'Omore' (ice cream) volumes recorded a volumetric growth of 72 per cent to 3.1 million liters,” commented an analyst.