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| Sunday, 17 November 2002 |
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Rs 4b anticipated: IPOs to boost share market by SUREKHA GALAGODA and ELMO LEONARD Sri Lanka's efforts to expand its share market will get a big boost this month with the opening of three Initial Public Offerings (IPOs) covering three high growth sectors - telecommunication, healthcare and agriculture. The issues of Sri Lanka Telecom (SLT), Apollo Hospitals and Tess Agro together plan to raise over four billion rupees from both local and foreign investors. Director General Colombo Stock Exchange (CSE) Hiran Mendis said: "It is a positive development as it will increase the market capitalisation by Rs 30 billion. The present market capitalisation will be increased by 15 per cent." "We require new companies to list on the CSE to increase liquidity and market capitalisation to be back in the Morgan Stanley Emerging Markets Index which is the benchmark for foreigners who wish to invest in emerging markets." According to an analyst, the IPOs will restore investor confidence in the capital market while improving the sectors. No companies are currently listed in the telecommunications sector. Tess Agro exports 100 per cent Sri Lankan products and its IPO is expected to boost the export drive. On the negative side, the analyst said the reform process is too slow. "If the Government's policy is to liberalise, it should be done quickly. The other operators too should be encouraged to go for a listing," he noted. "Even at a time the market is down, utility companies are considered a safe haven". The Government plans to divest 12 per cent of its shareholding in SLT, amounting to Rs 217 million at Rs 15 each. In the event of an oversubscription, options are exercised in full; the Government will divest 15 per cent of the shares amounting to Rs 270 million. After the divesture, the Government will own between 49.5 and 46.5 per cent of the shares, NTT Japan 35.2 per cent and employees and others, 3.3 per cent. Once the issue is completed, SLT will be the biggest listed company on the CSE. The IPO will open on November 28 but applications were accepted from November 15. Apollo Lanka Hospital, the 350-bed, super speciality state-of-the-art healthcare facility, commenced operations on June 7. It will offer the public 20,554,967 shares at a price of Rs 15 per share to raise Rs 308 million, which will amount to 13 per cent of Apollo's total equity. The issue will open on November 21 and close on December 11. The monies raised will be used to cover the equipment purchased and debt incurred. The issue has been underwritten by Hatton National Bank, which is also the manager and banker to the issue. The Board of Investment-approved agricultural produce exporter, Tess Agro will offer 2.5 million shares at Rs 10 each, issued at par value, at the IPO which opens on November 21. The prospectus and share application forms are being issued to enable the public to subscribe. The issue is not underwritten and the company will use internally generated funds to mitigate any shortfall if the issue is not fully subscribed. The manager and sponsor to the issue is Merchant Bank of Sri Lanka while the banker to the issue is Seylan Bank Ltd. |
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