KARACHI: An unidentified investor is in the process of accumulating shares in Engro Corporation. Ranked among the country’s largest conglomerates, Engro is in the business of fertiliser, food, power generation, terminal, PVC Resin and commodity trade.

Engro posted the first loss in its history for the first-quarter 2012. Yet early in the year, the stock price shot up to outperform the KSE-100 index.

But with no end to problems on the gas shortage to its new $1 billion ‘Enven’ fertiliser plant, the stock in the company has dipped to a smaller gain compared to 29 per cent rise in benchmark since start of the calendar year.

The accounts of Engro Corporation for the period ended Dec 31, 2011, revealed four firms of Hussain Dawood Group in control of approximately 48 per cent shares. Among the group companies, Dawood Hercules had the biggest stake of 33 per cent followed by Patek seven per cent, Cyan five per cent and DH Fertiliser three per cent.

However, the latest figures show that another shareholder has accumulated close to 9.5 per cent of the company stock. That places the unidentified stockholder in the second place as the biggest shareholder after Dawood Hercules.

Analysts believe that disheartened by the company’s deteriorating financials, some selling by Hussain Dawood Group companies, by employees and local and foreign institutions may have enabled the new shareholder to accumulate large blocks of shares.

However, in order to conceal his identity, the acquirer is keeping his stake at around 9.5 per cent, slightly short of 10 per cent voting shares, at which according to regulations, the holder has to disclose the aggregate of his shareholding in a listed company to the said company and to the stock exchange on which the voting shares of the company are listed, unless special exemption granted by the regulator.

“As no such disclosure has been made, it is believed that the shareholder has less than 10 per cent and has for the present put a halt to further buying,” says an analyst at Topline Securities.

Some market participants are also putting forward the idea that the acquisition could be a prelude to a later hostile takeover bid by yet another hawk. Analysts recall that in 1991, employees of Exxon Chemical Pakistan in partnership with leading international and local financial institutions bought out Exxon’s share.

At the time of buyout, employees of Esso (Eastern) purchased 28 per cent shares in Exxon Chemical which later became Engro Chemical Pakistan (ECPL). Due to higher than average share float in the market the company has seen takeover attempts.

In the year 2000, Employees Management Group went to Court to stop a hostile take-over in the wake of accumulation of shareholding by the Hussain Dawood Group. However later on the Group and the Employees Management entered into a dialogue to settle the issue out of court, taking a conciliatory approach.

In reply to queries, a person close to the company, however, said on Saturday, that takeover was a far-fletched idea. “There are 12 directors on the Engro Board, so any one accumulating around 9 per cent stock can at best attempt to grasp one seat,” he said, adding that the elections were held in March this year and the next are not due until 2015.

But he admitted that it was possible to scan the ‘book closure list’ to discover major changes in pattern of shareholding. Pressed further, he said that possibly a foreign bank was the buyer of such large chunk of equity. Yet it was difficult to say if the bank was acting on its own or acting as a front for another buyer who wishes to remain anonymous.