Rs 14B fund to make NBFIs pretty

Financial consolidation
By Charumini de Silva

Ceylon FT: Sri Lanka's banking watchdog – the Central Bank – will provide funds to a few non-bank financial institutions (NBFIs) via Sri Lanka Deposit Insurance Scheme (SLDI) in order to make them attractive to investors for mergers and acquisitions.

Speaking to Ceylon FT Central Bank Deputy Governor, Ananda Silva said, "During the financial consolidation process we saw that there were a few NBFIs that needed further financial support to attract investors for mergers and acquisitions. Hence, the Monetary Board approved providing such financial support to those entities."

He said Sri Lanka Deposit Insurance Scheme had grown to Rs 14 billion to date. Refusing to reveal the amount the Central Bank would provide to these companies Silva said, "Depending on the requirement of the entities we will allocate funds to strengthen their financial condition."

Central Bank formulated the scheme on 2 October 2010, where the member institutions paid the premium on a monthly or quarterly basis. However the liability was allowed after 1 January 2012. The main reason for this gap was to allow the fund to grow substantially by 2012.

According to the Central Bank the deposits of the funds were re-invested on government papers.

The premium levied on eligible deposits ranges between 0.10% and 0.15% per annum. 

These premiums are credited to the Deposit Insurance Fund (DIF) operated and managed by the Monetary Board of the Central Bank.

The DIF is separate from the Central Bank and its liability is limited to the level of fund balance and the DIF will be audited by the Auditor General.

Silva said the setting up of the deposit insurance scheme had a positive impact on the industry. The scheme improved depositors' confidence and has a self-corrective mechanism where companies would not have to take it as a burden. Having this kind of scheme would also help to strengthen the financial system, he said.
www.ceylontoday.lk

Sinhaputhra profits up by 13.5% despite industry slump of 50%

Sinhaputhra recorded a growth in profitability in FYE 2014 vs. FYE 2013, despite the industry's profitability falling from Rs. 14 billion to Rs. 7 billion.

Managing Director Ravana Wijeyeratne said that Sinhaputhra's conservative expansion on credit growth allows it to steadily maintain its growth momentum without large variations that could be extremely damaging. Although, Sinhaputhra faces the same market conditions, the fact that they had not accelerated beyond their means and also thanks to its time tested product - loans, they have always been able to steady themselves during a lackluster performance in the vehicle market. Hence while the industry loan book growth shrunk from 21.6% to 12.1% in FYE 2013 vs FYE 2014, Sinhaputhra's loan book grew around the same space, at 16% and 15%, which explains a growth in profitability against the industry norms.

Sinhaputhra's growth in profits for the last three years have been from Rs. 52 million to Rs. 74 million and this year Rs. 84 million. www.island.lk

Diversification delivers for Spence managed Elpitiya Plantations

Aitken Spence-managed Elpitiya Plantations PLC recorded a profit-after-tax of Rs 480 million for the financial year ended 31st March, 2014. "Elpitiya's exceptional earnings were mainly driven by an excellent performance in oil palm and return on strategic investments made by the company into joint venture projects," the company said in a statement.

"Profit was commendable as revenue on tea &rubber had declined by around 8 per cent YOY, following the erratic weather conditions and the poor prices released for natural rubber. Increase in cost of production following revision of the workers' wages by 20 per cent had a significant impact on the Company's profitability. Our strong results are due to the teamwork by our employees," said Dr. Rohan M Fernando Managing Director of Elpitiya Plantations PLC and Director of Aitken Spence PLC.

The company's net assets had increased to Rs. 2.9 billion from Rs. 173 million at the time of taking over of the estates in 1997. Since taking over, the company has invested over Rs. 3.8 billion on tea and rubber replanting, factory development, diversification into oil palm & commercial forestry and other capital enhancements.

"New Peacock and Nayapane estates have achieved all-time record yields of 2,855 kg per hectare and 1,979 kg per hectare respectively in tea. This was made possible due to the good agricultural practices followed on the estates, with special emphasis on fertilizer inputs and upgrading factory machinery. We thank the government for the subsidy given to the industry which has helped us maintain fertilizer levels," said Tony Goonewardena, Executive Director of Elpitiya Plantations PLC.

Commenting further, Goonewardena stated that the company's strategic investments into re-forestation (commercial forestry) and hydro power projects brought in significant income during the financial year under review. The joint venture project with Dianhong International Limited, to produce Chinese specialty black tea and green tea at the company's newly developed Harrow Tea Factory in Pundaluoya also contributed substantially to the company's profit along with the income derived from the palm oil processing factory, which is jointly owned by Elpitiya Plantations PLC with two other regional plantation companies.

"Company's strategic diversification programme into large scale palm oil cultivation in the low country region has paid dividends by contributing considerably into the company's profitability. Deviturai Estate recorded the highest ever yield of 16,281 kg per hectare on oil palm and Talgaswella Estate, a major tea & oil palm plantation in the low country, has made exceptional returns." said Bhathiya Bulumulla, the Chief Executive Officer of Elpitiya Plantations PLC.

The Company also has commenced aneco-tourism project in the low country and planning to extend the same concept on Dunsinane, Sheen and Fernlands estates in the upcountry region in the current year.

Elpitiya Plantations PLC adopts the stringent food safety standards in the production of tea. Dunsinane, New Peacock, Nayapane tea factories in the up country region and Talgaswella and Deviturai Tea Factories in the Low Country regions have been certified for ISO 22000:HACCP for Food Safety Management Standards and all the tea factories have been certified for Ethical Tea Partnership and Forestry Stewardship Council (FSC) Certification for best practices on health & safety and environment Management. The Company is currently working towards obtaining rain forest alliance certification to all its
up country tea estates.

Elpitiya Plantations PLC is committed towards improving the living conditions of the worker population on the plantations. Projects include construction of new housing units, water and sanitation, for more than 50 housing units for several estates.

Further, plans are underway to construct 510 housing units on Dunsinane & Meddecombra Estates with the assistance of the Indian Government during the years 2014-2016.

As a pilot project, bank accounts were opened for all employees of Talgaswella Estate while the company also has facilitated to provide scholarship grants to 21 children of the estate workers, who excelled in their studies to pursue their higher education at the universities.

Elpitiya Plantations has also pioneered to construct an elders home on Meddecombra Estate, the first of its kind in the Plantation Sector, to accommodate and look into the wellbeing of 40 retired workers , in collaboration with the French Donor, 'Foundation Adam Pierre', at a cost of over Rs. 25 million.

The company is continuously exploring sustainable avenues for marketing its produce abroad, especially tea and rubber, in North and Southeast Asia.
www.ceylontoday.lk

Singapore firm ups stake by further 40 per cent in e-Channelling

The Singapore based venture that made a mandatory offer to purchase shares in the doctor-channelling company e-Channelling has increased its existing stake by a further 40 per cent.

In the wake of the mandatory offer by Singapore based Senior Marketing Systems Asia to take over the e-Channelling company, the company made an announcement to the Colombo Stock Exchange on Wednesday stating that its period had expired.

SMS Asia had received offers amounting to 39.84 per cent of the ordinary shares of e-Channelling PLC. SMS Asia held a stake of 47.5 per cent or 58 million shares in e-Channelling prior to announcing the mandatory offer. These acquisitions were made between June 11 and July 14 during the period of the offer.

The Singapore based company increased the stake in e-Channelling by 17.5 per cent when it purchased 21, 429, 204 ordinary shares. In this respect, they have increased their share portfolio to 57, 946, 497 ordinary shares and holding 47.4 per cent of the voting ordinary shares in issue. Shares amounting to 16, 060, 003 were sold on Monday by British American Technologies at Rs.14 per share to Senior Marketing Systems Asia.

Previously, SMS Asia held 29.9 per cent of the total issued and paid shares amounting to 36, 517, 293 shares.

Currently the second largest shareholder is Trading Partners Pvt. Ltd which holds a 28 per cent stake in the company. The market would be watching the moves by this company to ascertain if they too would sell out or not, brokers said.

The mandatory offer has been made at the highest price paid within the 12 months of Rs.14 at which SMS Asia bought the last amount of shares as well.

The remaining number of ordinary shares is 64, 184, 918 amounting to 52.55 per cent of the total issued and paid up ordinary share capital of e-Channelling.

SMS Asia was established in 2012 as a subsidiary company of SMS Co. Ltd for the purpose of investing in companies and management of overseas business of the parent company, which is a company listed on the Tokyo Stock Exchange.

SMS Asia has invested in many companies in Asia namely Korea, Vietnam, Taiwan, Indonesia, Sri Lanka, Australia for the purpose of business development in healthcare and IT sectors.
www.sundaytimes.lk

SEC needs to control economic power blocs in the stock market

Sri Lanka’s Securities and Exchange Commission (SEC) has been urged to effectively deal with mergers and acquisitions that “give rise to the concentration of economic power and market control opportunities”.

In a letter to SEC authorities, governance advocate and rights activist Chandra Jayaratne has requested the SEC to make a public media announcement informing all stakeholders of the securities rules and regulations applicable and the effective enforcement processes in place within the SEC in dealing with mergers and acquisitions.

He has said that if no such regulations and enforcement processes are in place, the public has a right to know the rationale for such a lacunae to be allowed to remain within the regulatory regime, and what strategic steps are being planned by the Government and the relevant authorities in order to remedy such an unacceptable situation.

Mr. Jayaratne, a former Chairman of the Ceylon Chamber of Commerce who regularly raises issues of public, social and economic importance, said the concentration of economic and market control power in the hands of a few would affect the interests of consumers and businesses. It would negatively impact on the growth and prosperity of the nation and its people in the longer term, due to the inherent likelihood of such concentration leading to anticompetitive practices in an effort to obtain and maintain control, he added.

“Such fears have resulted in appropriate securities regulations being enacted and enforced with effectiveness, to combat the likely anticompetitive practices, diminished free market opportunities and limits placed thereby on individual initiative,” he said.

Therefore Mr. Jayaratne pointed out, it was deemed essential for effective market operation and growth and prosperity of nations and people that “Concentration” arising from the mergers of two or more previously independent undertakings, the acquisition of direct or indirect control (whether by purchase of securities or assets, by contract or otherwise) of the whole or parts of one or more other undertakings, or the establishment of a joint venture involving the acquisition of joint control of a full function joint venture undertaking are regulated and effectively controlled by a duly empowered regulator. The letter explained ‘control’ as: “Control” (both ‘sole control’ or ‘joint control’ in cohort with other undertakings, where the control arises from the joint initiatives of the separate undertakings in exercising decisive control) is exercised by rights, contracts or any other means, which either separately or in combination, confer the possibility of exercising decisive influence over an undertaking by a party acquiring the ability to determine an undertaking’s commercial strategy, irrespective of whether such acquisition allows majority or minority control by way of shareholding, but provides by way of the size of such shareholding, associated veto rights, rights of control over board appointments, other rights granted to shareholders explicitly or otherwise, empowering such a party to get adopted or block strategic commercial decisions including approval of annual budgets or business plans and appointments of key management.
www.sundaytimes.lk

PLC deposit base hits Rs 41billion

People's Leasing and Finance PLC (PLC), a subsidiary of the People' Bank, is one of the leading leasing companies in Sri Lanka.

Sunday Observer Business spoke to People's Leasing and Finance (PLC) Chief Executive Officer and General Manager D.P. Kumarage for his views on the company.

Excerpts of the interview.

The leasing industry is going through a dull period. Many of the infrastructure projects are now being completed and unless new projects are launched, there will be a lull in the market.

As a leasing company, we are one of the market leaders with 20 percent market share. We strive hard to improve our market share.

The company which was selected as one of the 'Great Places to Work' was 18th among top-25 listed companies.

It has become one of Asia's promising brands. It has a deposit base of 41 billion.The profit for the year stood at 3.1 billion and the total asset base of the company was Rs. 114 billion. It has invested Rs. 66 million on CSR initiatives and Rs. 511 million on green financing.The PLC has won many awards. It was awarded the platinum in the competition class of annual reports in the finance industry, the platinum - most inspirational worldwide special achievements accolade in the overall competition category and ranked 5th among the top 100 rankings of the competition at the 2012 Spot Light Awards - Global Communications Competition organised by League of American Communication Professionals.

The company retained the coveted Gold award for the fifth consecutive year in the leasing sector at the Annual Report Awards organised by the Institute of Chartered Accountants of Sri Lanka. 

www.sundayobserver.lk

Forbes Media Agrees To Sell Majority Stake To A Group Of International Investors To Accelerate The Company's Global Growth

– Forbes Family Welcomes Significant Investment by Investor Group –

– Investors Are Committed to Forbes’ Brand, Strategy, Values and Management –

– Forbes Family Will Retain Significant Interest; Current Management Team Will Remain in Place; Steve Forbes Will Continue as Chairman and Editor-in-Chief, Mike Perlis as President and CEO –

– Forbes Media will remain a privately-held, independent company headquartered in the U.S.; Company’s Asian business will continue to be led by Forbes Media CEO/Asia Will Adamopoulos –

NEW YORK (July 18, 2014) – Forbes Media LLC today announced an agreement under which a group of international investors will purchase a majority stake in the company. The Forbes family will retain a significant ownership stake, will stay actively involved in Forbes Media and will work with the investor group to further increase market share of the existing Forbes Media product lines in media, digital, technology, as well as brand extensions. Upon closing, Elevation Partners will fully exit its investment in Forbes Media. The terms of the transaction were not disclosed.

The newly formed Hong Kong-based investor group Integrated Whale Media Investments (“IWM”) is composed of international investors. The group is led by Integrated Asset Management (Asia) Limited (“IAM”). IAM, which was founded by Tak Cheung Yam, is a Hong Kong-based investment company primarily engaged in public and private equity investments, with expertise in telecommunications, finance and technology. Another significant investor in IWM, Wayne Hsieh is the Co-Founder of ASUSTeK Computer Inc., one of the world’s leading PC vendors and the No.1 motherboard manufacturer in the world. He is based in Singapore.

The investor group will provide capital, as well as financial and operational expertise, and intends to leverage its international relationships to strategically enlarge Forbes Media’s reach on a global scale. In partnership with IWM, Forbes Media will build on the wide and rapidly expanding appeal of the Forbes brand that today reaches approximately 75 million people worldwide with its business message through print, digital, TV, conferences, research, social and mobile each month. The group supports Forbes Media’s ongoing transformation into a global media, branding and technology company. Forbes Media is profitable and, in 2013, achieved its best financial performance in the last six years.

Forbes Media LLC will retain its operating name and will remain a privately-held, independent company headquartered in the U.S. Steve Forbes will maintain his role as Chairman and Editor-in-Chief, and current President and CEO Mike Perlis will continue to lead the company’s management team. Forbes Media’s Asian business will continue to be directed out of Singapore under Forbes Media CEO/Asia Will Adamopoulos.

“This is a major milestone for the company and our family, and we’re pleased to partner with a forward-looking investor group to further drive the evolution and growth of this exceptional company,” said Steve Forbes, Chairman and Editor-in-Chief of Forbes Media. “Our partners respect our brand and values, and support our longstanding mission of championing entrepreneurship and free market capitalism through quality, independent business journalism. The best evidence of their commitment to what we stand for is their insistence on the continued involvement of the Forbes family, the current management and our highly talented editorial team. I will remain deeply involved in the future of the company.”

“We are investing in the Forbes brand, history, family involvement and a management team that is successfully transforming the company. Forbes Media is built around a brand that is synonymous with success and a mission that has tremendous respect and global appeal in established and growing markets around the world. As more market-based economies emerge globally, interest in the information that Forbes provides and the message it delivers resonates with a growing audience,” said Tak Cheung Yam, Chairman and Founder of IAM. “Given the tremendous growth of digital in the past decade, Forbes Media’s future plans will include additional internet and social media expansion projects. Together with the Forbes family and the management team, along with the appropriate strategic and financial support, we will find new ways to unlock the value of the Forbes brand.”

“We see enormous potential to extend the Forbes brand, building on its innovation and the solid foundation of a media company known for excellence in business journalism with an extensive print and digital footprint and a diverse array of branded products,” said Wayne Hsieh, Co-Founder of ASUSTeK Computer Inc.

“This significant investment in the company is a strong endorsement of the global strength of our brand, as well as our progress and innovative plans for continued growth,” said Mike Perlis, President and CEO of Forbes Media. “We are combining the best of our historic legacy with an infusion of new resources, capabilities and expertise to accelerate Forbes Media’s global growth. We already work with members of IWM’s management through our existing real estate and financial services lines of business. Our partners fully appreciate the power of the Forbes brand to attract new audiences in diverse markets all over the world – a foundation we look forward to building on together.”

Forbes Media has built a diversified portfolio of assets, while maximizing the power of the Forbes brand across multiple categories, including media, digital, technology and branded products. In the U.S., Forbes magazine, the iconic front door to the Forbes brand, has increased its readership to more than 6 million. Internationally, since 2008, Forbes has expanded its publishing activities from 9 licensed local editions around the world to 36, covering 63 countries in 21 different languages. Forbes’ digital footprint has exponentially broadened as Forbes.com has transformed from a web site to a robust publishing platform. Currently, Forbes has 24 international web sites. The company’s growth has also been fueled by new brand extensions, including conferences, real estate, education, financial services and technology license agreements.

“Elevation has been a great partner with Forbes Media over the past eight years. This collaboration has enabled us to position ourselves for the next phase of growth that we see ahead with IWM,” added Steve Forbes.

Completion of the transaction is expected to take place this year and is subject to customary closing conditions.

Deutsche Bank served as financial advisor, and Cadwalader, Wickersham & Taft LLP served as legal advisor to Forbes Media. Credit Suisse (Hong Kong) limited served as financial advisor, and Skadden, Arps, Slate, Meagher &. Flom LLP and LKP Global Law LLP served as legal advisors. RSM Nelson Wheeler performed the financial and tax due diligence work for the investor group.

About Forbes Media

Forbes Media, publisher of Forbes, Forbes Asia and Forbes Life magazines and Forbes.com, is an authoritative source of news and information on business, investing, technology, entrepreneurship, leadership and affluent lifestyles. The company has built a diversified portfolio of assets as part of its ongoing transformation into a global media, branding and technology company. The Forbes brand today reaches approximately 75 million people worldwide with its business message through Forbes and ForbesLife magazines and its 36 licensed local editions around the world, Forbes.com, TV, conferences, research, social and mobile each month. The Forbes magazine iPad app merges the power of print storytelling with social sharing and the web. Forbes Media’s brand extensions include conferences, real estate, education, financial services, and technology license agreements. The company plans to launch ForbesLife.com in September 2014.

About Integrated Whale Media Investments

Integrated Whale Media Investments (IWM) is a newly formed Hong Kong-based international investor group. Investors in IWM include Integrated Asset Management (Asia) Limited (“IAM”). IAM, which was founded and is chaired by Tak Cheung Yam, is a Hong Kong-based investment company primarily engaged in public and private equity investments, with expertise in telecommunications, finance and technology investments. Another significant investor in IWM, Wayne Hsieh is the Co-Founder of ASUSTeK Computer Inc., one of the world’s leading PC vendors and the No.1 motherboard manufacturer in the world. He is based in Singapore.