Sri Lankan stocks slip from near 3-1/2 yr closing high; Keells leads fall

Oct 7 (Reuters) - Sri Lankan stocks ended a tad weaker on Tuesday after hitting their near three-and-a-half-year closing high in the previous session, led by market heavyweight John Keells Holdings Plc while investors waited for cues from September-quarter earnings.

The main stock index ended 0.14 percent, or 10.59 points, weaker at 7,396.01 after marking its highest close since May 31, 2011 on Friday.

"There was a bit of profit taking in John Keells, which brought the market down. The earning season is also around the corner and all are waiting to see the results," said a stockbroker asking not to be named.

Foreign investors sold a net 12.5 million rupees worth of shares on Tuesday, but they have been net buyers of 9.69 billion rupees so far this year, exchange data shows.

John Keells ended 2.58 percent weaker at 253.10 rupees, while Hayleys Plc fell 5.16 percent to 340 rupees.

The day's turnover was 1.74 billion rupees ($13.35 million), more than this year's daily average of over 1.35 billion rupees.

Stock and foreign exchange markets were closed on Monday for the Muslim holiday of Eid al-Adha, while they will remain closed on Wednesday for a Buddhist religious holiday. Normal trading will resume on Thursday. 

($1 = 130.3200 Sri Lankan rupee) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka stocks close down 0.14-pct

Oct 07, 2014 (LBO) - Sri Lanka's stocks closed with losses due to negative price movements on index heavy John Keells Holdings, brokers said.

The Colombo benchmark All Share Price Index closed 10.59 points lower at 7,396.01, down 0.14 percent. The S&P SL20 closed 9.67 points lower at 4,150.64, down 0.23 percent.

Turnover was 1.74 billion rupees, down from 4.39 billion rupees last Friday with 86 stocks closed positive against 111 negative.

Ceylon Tobacco Company closed 1.50 rupees higher at 1,160.00 rupees with three off-market transactions of 137.53 million rupees changing hands at 1,150.00 rupees per share contributing 8 percent of the turnover.

The aggregate value of all off-the-floor deals represented 28 percent of the daily turnover.

Sanasa Development Bank closed 15.80 rupees lower at 100.10 rupees, attracting most number of trades during the day.

Foreign investors bought 757.35 million rupees worth shares while selling 769.84 million rupees worth shares.

Index heavy John Keells Holdings closed 6.70 rupees lower at 253.10 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 2.40 rupees lower at 76.30 rupees and its W0023 warrants closed 1.60 rupees lower at 81.90 rupees.

Sanasa Development Bank is to raise one billion rupees by way of a rights issue, the bank said in a stock exchange filing.

The existing shareholders will receive one new ordinary voting share at 80 rupees each for every two voting shares held.

Tourist arrivals up 22.4% Jan-Sep 400,000 more needed to reach target

By Mario Andree

Ceylon Finance Today: With 1.1 million tourist arrivals reported during the first nine months of this year, Sri Lanka now needs only 400,000 tourists during the next three months to achieve the anticipated goal for this year, Sri Lanka Tourism Development Authority data revealed.

Tourist arrivals during the first three quarters of this year rose 22.4% to 1,107,178 from 904,197 recorded in the same period last year. Arrivals in September were up 16.8% to 105,535 from 90,339.

The government and the hospitality industry anticipates more than 1.5 million arrivals this year with a revenue of US$ 1.8 billion after receiving 1.27 billion visitors last year with an income of US$ 1.7 billion.

SLTDA data showed that during the month of September tourist arrivals from several markets had declined; the countries being Latin America and the Caribbean, Norway, Sweden, Switzerland, UK, Russia, Ukraine, Israel, Kuwait, Philippines, Singapore, Thailand, Pakistan and New-Zealand.

Eastern Europe continued as Sri Lanka's leading tourism market, followed by South and East Asian regions.

However countrywise, India led arrivals to the country followed by UK and China.

Overall tourist arrivals during the first three quarters from North America increased 11.5% to 52,622, supported 3,835 visitors, up 17% in September compared to year ago, while arrivals from Latin America and Caribbean during the nine months rose 32.6% to 2,892, as arrivals in September declined 4.5% to 322.

Arrivals from Western Europe during the three quarters rose 14.2% to 355,154, supported by 28,234 visitors, up 6.5% in September, while arrivals from Eastern Europe increased 37.9% to 106,940, as arrivals in September declined 6.8% to 7,058.

Arrivals from Africa increased 75.1% to 8,393 during the nine months, supported by 810 visitors, up 47.3% in September, while arrivals from Middle East rose 16.7% to 71,713 during the nine months, supported by 8,289 visitors, up 35.5% in September.

Arrivals from East Asia during the three quarters rose 52.1% to 207,214, supported by 23,516 visitors, up 57.8% in September, while arrivals from South Asia during the nine months increased 15.7% to 258,357, supported by 28,561 visitors, up 9.7% in September.

Arrivals from Australasia during the nine months rose 8.4% to 43,893, as arrivals in September declined 2.3% to 4,910.
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Commercial Bank ranked 'The Strongest Bank in Sri Lanka'

The Commercial Bank of Ceylon was adjudged 'The Strongest Bank in Sri Lanka in 2014' by The Asian Banker, a leading provider of strategic intelligence on the financial services industry.

A press release said: ‘The award is based on a detailed and transparent scorecard that ranks commercial banks on six areas of balance sheet financial performance: the ability to scale, balance sheet growth, risk profile, profitability, asset quality and liquidity.

‘It was formally presented to Commercial Bank Chief Operating Officer andExecutive Director S Renganathan on September, 30 in Boston, USA,by Todd R. Burwell, President/CEO of BAFT, the association for organisations actively engaged in international transaction banking. The presentation took place on the side-lines of Sibos 2014, the annual conference, exhibition and networking event organised by SWIFT for the financial industry. Billed the world's premier financial services event, this year's Sibos conference was attended by 7,000 international decision makers and topic experts from financial institutions, market infrastructures, multinational corporations and technology partners.

‘This ranking as Sri Lanka's strongest bank places Commercial Bank among The Asian Banker '500 Largest and Strongest Banks' - a ranking widely followed by investors, analysts and the media as the leading source to assess the financial strength of commercial banks in the region.

‘Commenting on this latest international ranking accorded to the Bank, Commercial Bank's Managing Director/CEO JeganDurairatnam said: "The key performance indicators assessed by the panel of international experts are the components of the financial strength that is the ultimate goal in Banking. This ranking reaffirms that Commercial Bank continues to get all its fundamentals right even in tough conditions."
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Rajarata entrepreneurs enthusiastic about possibility of listing on CSE

Members of the business community in Anuradhapura showed an avid interest regarding the possibility of raising capital through a listing on the Colombo Stock Exchange (CSE), at a forum held recently to create awareness on the benefits of going public amongst entrepreneurs.

The issuer relations forum, held on 29 September at the Heritage Hotel Anuradhapura, which was jointly organised by the Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE) in association with the Chamber of Commerce Anuradhapura, saw the participation of over 20 members of the business community from the region.

The program began with a presentation on the benefits of listing both equity and debt on the CSE by Renuke Wijayawardhane, Chief Operating Officer (COO) of the CSE. It was followed by a panel discussion, where many areas relating to the listing process was clarified to the audience, while clarifying a number of commonly held misconceptions about listing on the CSE.

The panel comprised of the Chairman Raigam Wayamba Salterns PLC Dr. Ravindranath Liyanage, Wijewardane and SEC Director Corporate Affairs Harshana Suriyapperuma. 

During the discussion a number of key questions were posed by the audience to facilitate a lively and informative dialogue.

“There are a number of myths about the drawbacks of listing; chief among them is the idea that being a listed entity will result in a loss of control for the existing shareholders of the company. However, this is not the case because, as a company listed on the Diri Savi Board you need to have only 10% of your total shares in the hands of the public and on the Main Board the public holding requirement is only 25%. This is more than adequate to retain the control of the company, even after listing. It is also vital to remember that there is no loss of confidentiality or competitive advantage by listing,” Wijewardhane said in his opening remarks.

Suriyapperuma said: “IPOs facilitate wealth creation for the promoters of the business and within a fairly regulated framework, entities are able to ensure good corporate governance and be transparent. Through the said framework investors are provided with timely disclosures to make appropriate investment decisions. This disclosure centric framework provides the opportunity, to the management of a business to effectively comply with regulatory requirements which are both business and investor centered.

In this process the element of investor confidence is upheld, which will allow long-term development of the business as well as the capital market. Budget concessions obtained were also explained to participants; including the 50% tax reduction for new listings subject to meeting them meeting the set-out criteria.”

Expanding on the benefits of listing, through the experience of Raigam Wayamba Salterns, Dr. Liyanage explained: “When Raigam decided to list, one of the primary reasons for this decision was the guarantee that being listed would ensure an objective value to the company.”

He further related the process of thought that goes through the minds of an entrepreneur prior to listing: “Most people are worried that they will have to share their ownership by diluting shareholding.”

However, he affirmed that the benefits of sharing ownership with the public have outweighed any anxiety of listing.

Participants were interactive and engaged with Dr. Liyanage who shared in-depth his experience of listing on the Exchange.

Members of the Anuradhapura Chamber of Commerce as well as the entrepreneurs of the region who participated at the Forum were delighted to learn about listing on the CSE as a very viable method of raising capital.
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Bimputh Finance gets $ 750,000 loan from Rural Impulse Fund to increase financial inclusion

* First investment of Incofin Investment Management in quick evolving Sri Lankan microfinance market

* Creation of employment for thousands of low income families and increase in 
opportunity for micro-, small and medium enterprises

* Introduction of new microfinance products including micro housing and micro savings

Bimputh Finance, a Sri Lankan non-banking finance company received a loan of $ 750,000 from Incofin IM’s Rural Impulse Fund (RIF I). The funds will be used by Bimputh to expand its microfinance operations in the island nation. TSW Capital Services acted as the sole financial advisor to Bimputh Finance for this deal.

Bimputh Finance started its greenfield operations in 2007. Originally, it was fully owned by the Daya Group. In 2011, the company made an introductory offer on Diri Savi Board by inviting public to participate in its growth story.

In 2012, Bimputh ventured into microfinance staring with 2,000 clients and 3 branches. 

Today, Bimputh Finance operates through a combined network of 25 branches offering financial services to a customer base of nearly 65,000, mainly micro, small and medium entrepreneurs. Its operations are focused largely in the rural areas of Ampara, Jaffna, Monaragala, Puttlam, Kalutara, Gampaha, Batticaloa, Badulla, Hambantota and Colombo District.

Commenting on the investment, Daya Gamage, Chairman of Bimputh Microfinance, said: “Bimputh Finance has come a long way since 2007. Going forward we aim to become one of the leading microfinance institutions in Sri Lanka, providing our clients with facilities at the lowest interest rates possible in order to promote and nurture their enterprises. 

Incofin IM’s value addition to our business comes not just from financing our expansion plans but also from their technical knowledge, guidance and transfer of best practices.”

Speaking on the investment in Bimputh Microfinance, Aditya Bhandari, Regional Director South Asia Incofin IM, stated: “Our partnership with Bimputh shows our commitment and ability to take a leadership position in identifying strong and likeminded institutions which are focused in providing access to finance to the masses. The Sri Lankan microfinance market is quick evolving and our partnership will enable Bimputh to be ahead in adapting to the global best practices.”

Commenting on the new partnership, Chamindra Gamage, Executive Director at Bimputh Microfinance, said: “Our growth in the last two years has been tremendous. Our ability to receive funding from a leading microfinance fund such as Incofin IM’s RIF I strongly demonstrates the high level of excellence in our operations and the strong work ethic of the team in maintaining an almost 100% recovery rate. Our partnership with RIF I will be the stepping stone towards becoming a key player in the microfinance sector in Sri Lanka. 

With the support of RIF I, we plan to introduce new and exciting products not presently seen in Sri Lanka’s finance sector, including micro housing and micro savings bringing about financial inclusion to our clients.”
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Fitch rates Siyapatha Finance’s Subordinated Debt ‘A-(lka)(EXP)’

Fitch Ratings Lanka has assigned Siyapatha Finance Ltd’s (SLFL; A(lka)/Stable) proposed subordinated redeemable debentures of up to Rs. 1 b an expected National Long-Term Rating of ‘A-(lka)(EXP)’.

The proposed debentures will have a five-year tenor with bullet principal repayment at maturity. Coupon payments will made annually at a fixed rate. The debentures are to be listed on the Colombo Stock Exchange. SLFL expects to use the proceeds to strengthen its regulatory Tier 2 capital and to reduce maturity mismatches between assets and liabilities.

The final rating is contingent on receipt of final documentation conforming to information already received.

Key rating drivers
The proposed debentures are rated one notched below SLFL’s National Long-Term Rating to reflect their subordination to senior unsecured creditors.

SLFL’s rating reflects support from its parent, Sampath Bank PLC (AA-(lka)/Stable). SLFL is rated two notches below its parent because Fitch classifies SLFL as strategically important to Sampath Bank. This view is premised on Sampath Bank’s 100% ownership of SLFL, involvement in the strategic direction of SLFL through board representation, and the potential reputational repercussions on Sampath Bank should it allow SLFL to fail.

Rating sensitivities
Any changes to SLFL’s National Long-Term Rating would impact the issue’s National Long-Term Rating. SLFL’s rating could change if Sampath Bank’s rating changes or if SLFL’s strategic importance to Sampath Bank changes.
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Asian Alliance Insurance ties up with Senaratne Insurance Brokers

Asian Alliance Insurance PLC last week entered into an agreement with Senaratne Insurance Brokers Ltd. to introduce a product called Total Life Plan to its valued customers in Sri Lanka.

The Memorandum of Understanding in this regard was signed by Ramal Jasinghe, the Director/CEO of Asian Alliance Insurance PLC and Nihal Senaratne, the Chairman of Senaratne Insurance Brokers Ltd.

Any Sri Lankan between the ages of 18 and 55 is eligible for this policy to help cover any expenses that may arise in the event of the death of the policyholder. The policy applies 24 hours a day, 365 days of the year and anywhere in the world and cash can be received within 24 hours of notice.

Asian Alliance Insurance PLC is a Composite Insurer rated BBB+ by Fitch Ratings and is one of the few companies in the industry to have obtained an international rating. The shareholders of the company include DEG and FMO who are internationally reputed AAA DFI institutions.

Asian Alliance Insurance PLC operates through a network of 53 locations that are positioned in all provinces of the country and is part of the fast-growing Softlogic Group that has interests in healthcare, retail, financial services, ICT, leisure, automobiles and restaurants.

Senaratne Insurance Brokers Ltd., incorporated in 1979, has grown to be one of the largest broking companies in Sri Lanka over the last 35 years. The company has a clientele comprising both corporate and individual clients and delivers tailor made corporate solutions and innovative personal insurance plans to suit different requirements.

Senaratne Insurance Brokers represents the UK-based global giant, Jardine Lloyd Thompson Group in the capacity of their International Network Member in Sri Lanka and the Local Partner of the Worldwide Broker Network (WBN) and in 2014 were awarded ‘Best Insurance Broker in Sri Lanka’ by both the Global Banking and Finance Review, UK and International Finance Magazine, UK.
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Central Finance to buy Isuru Leasing

Central Finance Company Plc has signed a Share Sale and Purchase Agreement to buy a majority stake in Isuru Leasing Company Ltd., as part of the Central Bank-initiated financial sector consolidation program.

Isuru is a Kandy-based relatively small finance/leasing company.

Purchase price will be based on the net asset value and is subject to obtaining regulatory and corporate approvals.
www.ft.lk

Pan Asia Bank Rs. 3 b debenture opens next week

Pan Asia Bank’s Rs. 3 billion listed debenture issue will be up for grabs from next week.

The bank is issuing 20 million unsecured subordinated redeemable debentures at Rs. 100 each and in the event of an oversubscription will issue a further 10 million debentures.

The public can apply for the debentures from 13 October onwards whilst the official opening of the issue is 24 October.

The Colombo Stock Exchange has approved in principle the application to list the debentures.

Joint managers to the issue are People’s Bank Investment Banking Unit, Capital Alliance Partners, Navara Capital Partners and Company Secretary of PABC.
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Associated Motor Finance gets 71% of Arpico Finance

Associated Motor Finance Company Plc has increased its stake in Arpico Finance Plc to 71%.

This is following Alliance Finance Plc selling 19.53% (1.45 million shares) and related party Dawi Investment Trust Ltd., selling 10% (0.75 million shares) stake at Rs. 166 per share, the same price at which a mandatory offer is on.

AMF triggered the SEC Takeovers Code when it acquired a 40% stake in Arpico Finance from Alliance Finance-related party Alfinco Insurance Brokers Ltd. for Rs. 501 million. The acquisition was part of the Central Bank-initiated financial sector consolidation.

Other major shareholder of Aprico Finance is Dhammika Perera who holds 4%. The company’s public holding is 39% and has 800 shareholders. It has 585 shareholders owning between one and 1,000 shares with a collective stake of 1.58% and a further 173 shareholders holding 1,000 and 10,000 shares with a combined stake of 6.73%.

The net asset per share of Arpico is Rs. 91.41 as at 30 June 2014, down from Rs. 129.73 end FY14.
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BOC debenture draws Rs. 8.5 b demand

The recent debenture issue of the Bank of Ceylon (BOC) had drawn Rs. 8.5 billion worth of applications.

It offered 40 million unsecured subordinated redeemable debentures at Rs. 100 each with the option to issue an equal amount in the event of an oversubscription.

Overall there had been 75 applications requesting for 85.192 million debentures. The debenture was the sixth to be issued by BOC, and its first for the year. Fund raised from the issue will be used to strengthen BOC’s Tier 2 capital base and reduce asset and liability maturity mismatches.

Rated ‘AA’ by Fitch, the debenture issue comprised of five types of debentures. Type A with a five-year tenure and 8% payable annually, Type B with a five-year tenure and 7.75% (Annual Equivalent Rate, AER 7.98%) payable quarterly, Type C with a tenure of five years and six months gross T-bill rate +0.50% payable bi-annually, Type D with a tenure of eight years and 8.25% payable annually and Type E with a tenure of eight years and six months gross T-bill rate +0.50% payable bi-annually.

Type A drew the highest number of applications 40 requesting for 54.5 million debentures followed by Type B – 14 applications requesting for 2.15 million debentures and Type D with 10 applications requesting for 20.28 million debentures. Type C drew eight applications with 8.25 million debentures and Type E saw three applications requesting for 300 debentures. Retail applications amounted to 64 whilst applications with payment by bank guarantees were 11. 
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