Ceylon IPO Fund qualifies for 10% IPO allocation

The Securities and Exchange Commission (SEC) of Sri Lanka in June issued a directive to reserve 10 percent of each IPO for qualifying Unit Trusts, following heavily oversubscribed IPOs that left poor allocations to retail investors.

Accordingly, Ceylon Asset Management (CAM) launched the first ever, dedicated IPO fund in June , with the aim of maximising IPO returns to retail investors by enabling greater allocations in IPOs.

The Ceylon IPO Fund has qualified for the 10 percent allocation by reaching 500 retail investors. The fund will only invest in selected IPOs but will participate in the Colombo Stock Exchange (CSE) only to dispose of the shares acquired from IPOs. All remaining cash is invested in interest bearing fixed income instruments.

The Ceylon IPO Fund is designed to safeguard the capital of investors while generating tax-free income. Deutsche Bank AG is the Trustee and Custodian of the fund.

Ceylon Asset Management expects companies seeking capital to keep the IPO pipeline active over the next few years with the CSE offering attractive valuations. The current CSE Price to Earnings ratio (P/E) is 18 times the earnings, higher than other Asian Markets, offering ideal valuations for IPOs in Sri Lanka.

The SEC and CSE has launched an islandwide promotion campaign to attract retail investors to the CSE. The successful promotion held in Negombo, drew 500 investors where a raffle draw was conducted by CAM to promote the Ceylon IPO Fund. The lucky winner of Rs. 10,000/= IPO Fund Certificate was won by D. M. S. Chandrasiri from Negombo.

Ceylon Asset Management has an 11-year track record in index fund management to offer stock market returns at minimised risk. CAM also manages the top performing Ceylon Fixed Income Fund in 2010/11, as well as three equity funds namely Ceylon Index Fund, Ceylon Tourism Fund and the Ceylon Financial Sector Fund.