In a notable development after nearly two years, Greentree Holdings Limited has resumed its acquisition of shares in TRG Pakistan on the Pakistan Stock Exchange (PSX). Established on August 13, 2020, as a wholly owned subsidiary of TRG International Limited, Greentree Holdings was originally designated to manage liquid assets belonging to TRG Pakistan Limited.
As detailed in a notice dated December 20, 2021, Greentree Holdings was classified as a Special Purpose Vehicle (SPV) tasked with using its liquid assets to purchase shares of TRG Pakistan from the stock market over time. These assets include $120 million in cash and 5.4 million shares of Ibex Limited.
The timing of Greentree’s current buying activity coincides with the recent reclassification of Pakistan’s market status by FTSE Russell, which shifted the country from Secondary Emerging to Frontier Market status, effective September 23, 2024. This shift has prompted the Vanguard Fund to divest certain PSX-listed companies, including approximately 17 million shares of TRG Pakistan.
The recent purchases by Greentree Holdings may indicate a strategic response to Vanguard’s selling. Although the stock price had previously dipped to a low of Rs 50.88, Greentree Holdings opted not to provide liquidity at that time. Currently, Greentree Holdings holds a 28.54% stake in TRG Pakistan, leading to speculation about whether this buying trend signals the conclusion of an indirect “buy-back” process or an active pursuit of further acquisition.
If Greentree Holdings were to acquire a shareholding exceeding the 30% threshold, it would trigger a mandatory Tender Offer under Section 110 of the Securities Act 2015. This raises two possibilities: one simpler scenario where TRG Pakistan and Greentree Holdings finalize their share purchases, allowing for the remittance of assets held abroad back to TRG Pakistan, and a more complex scenario involving a Tender Offer.
Recent reports from the company’s Corporate Briefing Session, held on June 27, 2024, indicated that Greentree Holdings possesses $30 million in cash, with 5.4 million shares of Ibex Limited still unallocated. This combination of assets totals an estimated USD 136 million. Additionally, SEC filings reveal that Resource Group International sold 29,657 shares of Ibex Limited on September 16 and 17, 2024.
A potential Tender Offer for 50% of the Free Float at an assumed price of Rs 60 would require approximately $40 million, suggesting that Greentree Holdings has the financial capacity to pursue this strategy.
However, the path forward for TRG Pakistan and its management is complicated by ongoing litigation involving Mr. Zia Chishti and other key shareholders and directors regarding past conduct. Pursuing a Tender Offer could further entangle the company in legal disputes, though it would still facilitate the remittance of remaining assets back to TRG Pakistan.
As the situation unfolds, stakeholders are keenly observing whether Greentree Holdings’ strategy will yield significant results or fade away into uncertainty.
