Sri Lanka stocks close up 0.3-pct

Aug 06, 2014 (LBO) - Sri Lanka's stocks closed 0.26 percent higher with index heavy stocks gaining despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 17.84 points higher at 6,833.26, up 0.26 percent. The S&P SL20 closed 9.76 points higher at 3,752.79, up 0.26 percent.

Turnover was 1.40 billion rupees, down from 1.57 billion rupees a day earlier with 130 stocks closed positive against 62 negative.

Commercial Bank closed 90 cents higher at 142.40 rupees with an off-market transaction of 42.60 million rupees changing hands at 142.00 rupees per share contributing 3 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 5 percent of the turnover.

John Keells Holdings closed 1.10 rupees higher at 238.00 rupees with market transactions of 293.79 million rupees contributing 21 percent of the turnover.

JKH’s W0023 warrants closed 6.20 rupees higher at 78.00 rupees and its W0022 warrants closed 5.80 rupees higher at 71.80 rupees, attracting most number of trades during the day.

Foreign investors bought 371.45 million rupees worth shares while selling 148.20 million rupees worth shares.

Union Assurance closed 16.30 rupees higher at 174.20 rupees, contributing most to the index gain.

Distilleries closed 2.30 rupees higher at 204.00 rupees and Ceylon Tobacco Company closed 6.60 rupees lower at 1,130.60 rupees.

‘Issue of listed debt even more competitive than share issues’

By Sanath Nanayakkare

‘In relation to Capital Market operations, there is recognition that the issue of shares is not the only way to raise capital and that a more important role can be played by debt, since issue of listed debt can be even more competitive than issue of shares, Dr. P.B. Jayasundera, Treasury Secretary and Secretary to the Ministry of Finance and Planning said yesterday.

Jayasundera said so while delivering a detailed exposition titled ‘National Vision: Policy Implementation Perspective’, as keynote speaker at the Sri Lanka Economic Summit-2014 organized by the Ceylon Chamber of Commerce (CCC).

The CCC is holding this two-day annual event (August 5 and 6) at the Cinnamon Grand Hotel on the title, ’Sri Lanka 2020: Towards Surpassing the US$ 7,000 Per Capita’.

Jayasundera added: "Let’s not worry too much about the exact figure-US$ 7,000 or a slightly higher per capita by 2020, Jayasundera said. The per capita income target of US$ 4,000 for 2016 is likely to be a reality in 2015.

"The Central bank has done admirable work about securing mid-single digit inflaton, high external reserves and financial system stability targets—well on track.

"What is clear to me, however, from a policy implementation perspective is that the present Sri Lankan economic story is under-told, often distorted and down played.

"So the CCC theme for this year is indeed a good start, since ‘it is better late than never’ for those with prejudiced, politically - biased minds to take a pragmatic approach in the interest of the nation.

"Recent improvements in this direction are encouraging. In relation to financing and credit, investment bankers in this country have admitted that they never thought the pawning market was as large as about Rs. 500 billion and effective in the consumer sector.

"Similarly in relation to growth, some say that Sri Lanka’s growth is below potential and emphasize the need for greater external integration. These views generally reflect that the economy is in a growth mood and everyone is endevouring to find various growth strategies.

"Growth must be demand driven and must take place in demanded sectors to be able to cross boundaries. All these are areas that the government in its policy strategies has focused in a socially feasible and economically sustainable manner.

"In relation to the telecommunication sector, key players have been broken business barriers and facilitated industries to move towards real growth. They have observed that in developed countries, every 10 percent mobile penetration has contributed to 0.6 percent growth in GDP and in developing countries the impact is double."

"IT/BPO sector has gone into niche markets since comparative advantage could be explored by going up in the value chain. In this process they look for a larger workforce, IT parks and IT enabled buildings.

Jayasundera went into detail also on infrastructure development, power generation, manufacturing, logistics services, skills development, labour reforms, etc. which are comprehensively integrated into the government’s economic policy formulation and implementation.

Ajith Nivard Cabraal, Governor, Central Bank of Sri Lanka speaking on the occasion said a paradigm shift is taking place in the economy as traditional features of the economy are being surpassed by new market instruments.

"We have been able to maintain high growth with low-inflation. Exchange rate depreciation which had been a continual recurrence has been successfully controlled over the last eight years. Up to 2005, the exchange depreciation rate was about 9%-10%. It is now down to 3%. Next year there might be a gentle appreciation, he said.
www.island.lk

Cargills Bank first off the block with a finance company purchase

* Buys 74% of Capital Alliance Finance for over Rs. 400 m via Colombo Bourse

Cargills Bank Ltd. yesterday became the first bank to conclude an acquisition of a finance company under the Government-initiated and Central Bank facilitated financial sector consolidation.

The latest entrant to commercial banking, Cargills Bank bought 73.39% stake in Capital Alliance Finance PLC (CALF) for over Rs. 400 million. The bulk of the stake or 21.22 million shares were done at Rs. 15.50 each and a further block of 5.3 million at shares Rs. 15.40 each. These deals worth Rs. 410 million for 68.43% were done via crossing. The seller was Capital Alliance Holdings Ltd.

Cargills bought a further 5% stake from the market. Cargills Bank Ltd. will make the Mandatory Offer for the remaining shares of CALF as required by the Takeovers and 
Mergers Code 1995 (as amended), in due course.

Analysts said though few banks have announced plans to acquire or have signed MoUs to buy a finance company the Cargills Bank-CALF was the first concluded deal. The fact that CALF was a listed entity made the process easier following a due diligence.

The share price of CALF finished the day at Rs. 15.50, up by 30 cents whilst it an intra-day high of Rs. 15.90.

CALF’s 52-week highest price was Rs. 18.70 achieved in the quarter ended 31 March 2014 before closing at Rs. 14.60. Its net asset per share is Rs. 8.18.

As per shareholding of CALF as at 31 March 2014, apart from Capital Alliance Holdings, other major shareholders were Lankem Ceylon PLC (9%) and Divasa Equity (4.66%) and HVA Lanka Exports (2.695). Public shareholding was 31.57%.

For some of the directors of CALF, it was the second sale of control of finance companies. On Monday, they were involved in the sale of 96% stake in Trade and Finance Investments (TFI) to Commercial Credit for Rs. 1.5 billion, at double the net asset value.

Both companies had been well managed whilst CALF was much smaller in size. It had assets worth Rs. 1.25 billion and liabilities of Rs. 945 million. Capital and reserves amounted to Rs. 317 million. It finished FY14 with a loss of Rs. 8 million as against a profit of Rs. 7 million in the previous year. Its net operating income was Rs. 57.65 million, down from Rs. 69.7 million.

TFI on the other had assets worth Rs. 1.7 billion (of which loans and receivables amounted to Rs. 1.16 billion) and liabilities amounted to Rs. 877 million of which customer deposits amounted to Rs. 778 million. Equity amounted to Rs. 793 million including Rs. 441 million in retained earnings.

In FY14, the company posted a net profit of Rs. 166 million, up from Rs. 129.6 million. Income was Rs. 418 million, as against Rs. 294 million in FY13.
www.ft.lk

Assets of PCH Holding Chairman Rishan sequestrated by Court

DFCC Vardhana Bank on Thursday 31 July 2014 obtained orders from the District Court of Colombo against S.H.M. Ris-han and S.S. Rishan, seque-strating the shares of PCH Holdings PLC held in the name of Dynaris Holding Limited and sequestrating the funds payable to Dynaris Holding Ltd by its Stock Broker LOLC Securities Limited, excluding the funds to be utilised by the said LOLC Securities Limited in terms of the settlement entered in HC Civil 247/2013/MR on 22-07-2014 in respect of the sale of shares of Dynaris Holding Ltd in PCH Holdings PLC on the Colombo Stock Exchange on 25-07-2014 to secure any decree that may be entered in the District Court of Colombo Case bearing No. DDR 137/2014 for the payment of Rs. 87,538,561/34 and Rs. 7,666,923/97 to DFCC Vardhana Bank and a further order sequestrating the shares held in the name of S.H.M. Rishan. Having being satisfied of the facts placed before Court Additional District Judge Anawarathna delivered these orders.

Nigel Hatch PC with Dilumi De Alwis and S. Illange instructed by M/s Julius & Creasy appeared for the Petitioner DFCC Vardhana Bank.
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