First dedicated IPO fund launched

Ceylon IPO Fund, Sri Lanka's first ever dedicated Initial Public Offering (IPO) Fund for retail investors was launched last week.

Backed by Ceylon Asset Management (CAM) the fund will exploit an opportunity created for retail investors by the Securities and Exchange Commission (SEC). Following the heavy over subscription of some recent IPOs that gave small allocations to retail investors, SEC passed legislation that reserves 10 percent of each IPO for eligible Unit Trusts.

The fund will invest in selected IPOs but will not participate in the secondary market except to dispose shares allotted from IPOs. The tax exempt unit trust will safeguard the capital of investors while generating tax free interest income by investing all excess cash in short term fixed income instruments.

Retail investors can secure maximum allocation in IPOs by investing through this fund and withdraw their capital and profits at any time. IT saves investors the paperwork and interest costs involved with each IPO application.

Deutsche Bank AG is the Trustee and the custordian of the fund while the fund is licensed by the SEC.

Managing Director of Ceylon IPO Fund Dulindra Fernando said, "we won't risk any of our funds. Therefore, we will look into the company fundamentals and other aspects before investing funds in an IPO."

SG