Dumith-led consortium upbeat over Asia Securities buy

The former Credit Suisse Asia Pacific Managing Director and Chief Operating Officer Dumith Fernando-led consortium is upbeat over the opportunity to lead Asia Securities Ltd. to the next level and finds exciting times ahead in Sri Lanka as a frontier market.

Dumith, who will own 75% stake in Asia Securities along with three others, last week signed the Sales and Purchase Agreement (SPA) with Asia Capital to acquire control of one of the top stock-broking firms in the country. York Street Partners will hold an 11% stake and two others are individual investors. The deal is now awaiting formal regulatory approval and will be formally announced thereafter.

“We looked at several broking firms and found Asia Securities by far the best,” Dumith told the Daily FT in an interview after concluding the SPA.

Set up in the early 1990s, Asia has five branches with 63 staff. It had gone through several phases of ownership, but is renowned to have produced a sizeable community of stock brokers since inception, with some of its founders later becoming top-notch fund managers and entrepreneurs. With a good base of domestic retail and high net worth individual investors, Asia is among the top five in terms of turnover. The achievement is significant since of late Asia Securities has had minimal foreign turnover as opposed to it being one of the preferred brokers for foreign investors.

Given their experience and expertise, what Dulith and his consortium will bring to Asia is top research and with it foreign clients.

“We will build on Asia’s strengths and bring in new synergies as well as introduce good research and advanced products with professional service,” said Dulith, who will be the Executive Chairman in the new structure. “My mantra is ‘delivery is everything’ and we will take Asia Securities to a new level, bringing back some of the lost glory,” he added.

Industry veteran and current CEO Sabry Marikar will be appointed to the Board as well, along with Nirosh Wijekoon. Additionally a nominee from York Street Partners and another investor will also join the Board.
Dulith counts two decades in the fund management industry, mainly in Asia, including at Credit Suisse and JPMorgan.

In his role as Credit Suisse (the world’s fourth-largest wealth manager with $ 1.4 trillion funds under management), Asia Pacific Managing Director and Chief Operating Officer Dumith had brought several investor delegations from Asia in 2010 and 2011, whilst several top Lankan firms were regularly featured in Credit Suisse Annual Asian Investment Conference.

“Post-war there is lot of interest in Sri Lanka given the good macro story. The investor appetite driven by fundamentals is high,” Dulith told the Daily FT during the interview along with Sabry.

“I will be using my as well our partners’ networks and connections to draw more investments into listed equity and debt. We will provide credible insights as well as innovative investment or product ideas to tide over the liquidity issues at the Colombo stock market. We will be speaking to foreign clients and funds direct,” revealed Dulith, who noted that there was considerable interest to set up country dedicated funds among prospective investors as well.

With the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC) rolling out Central Counter Party (CCP) and Delivery Versus Payment (DVP) systems shortly, Dulith is of the view that this will unfold new opportunities to develop risk management products – a term he uses for derivatives. “In the future, the Sri Lanka capital market can attract a new breed of investors and we will tap that segment,” he added.

Having served global and Asian markets for decades, Dulith, who has an MBA from Harvard Business School and was elected a ‘Young Global Leader’ by the Davos, Switzerland-based World Economic Forum, said returning to Sri Lanka’s financial services market excites him.

“I see the opportunity for me in Sri Lanka as very exciting, especially given the post-war development and potential. Going forward the country offers an unprecedented opportunity in the investment banking and financing arena,” he said. His other interests include property development and agribusiness.

Dulith rules out that his entry is late. “In a post-war setting, five years is very early when you know the potential of the country and the market is more in the long-term say 30 or 40 years from now. The market is going to get bigger as well,” he said, drawing a parallel to the famous phrase “a rising tide lifts all boats”.

The entry of Dulith and takeover of Asia Securities by the consortium has been welcomed by the capital market as well as the investor community, which he said was good as the industry needs co-opetition rather than competition.

Recognising “people are the firm’s biggest asset,” Dulith said that the competent and disciplined staff at Asia Securities would be the differentiator and their skills would be further enhanced whilst delivery via multiple technology platforms would be stepped up. “We will give our clients more accessibility and real-time solutions, which is important,” he added.

Asia Securities has to its credit been the first to launch internet-based stock trading facility with its Colombo Direct Automated Exchange (CDAX). It also partnered Mubasher – Direct FN, a leader in ICT solutions in the Middle Eastern region’s financial markets. Asia Securities was also involved in the launch of the first country-specific investment fund – the Regent Sri Lanka Fund – way back in 1993 in collaboration with the Regent Pacific Fund Management Group of Hong Kong together with W.I. Carr Ltd.

Under the new ownership, Asia Securities also plans to move out of the World Trade Centre and relocate elsewhere in a strategic and convenient location.

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