Sri Lankan stocks gain for second session; volatility seen ahead

(Reuters) - Sri Lankan stocks gained for a second straight session on Wednesday, recovering from a near four-week closing low hit early this week, as banks rose in thin volume.

However, stock brokers expect volatility in the near future amid worries about early presidential polls and a mixed signal on interest rates.

President Mahinda Rajapaksa could hold a snap election in January, nearly two years before he has to, a close ally said, amid signs his popularity is fading among people who criticise his party for abusing power.

Yields on 364-day t-bills rose 11 basis points to 6.00 percent, the first rise since Dec 20, 2013.

Local investors have been buying stocks as they have no other options in a multi-year low interest rate regime.

Sri Lanka's main stock index gained 1.16 percent, or 83.36 points, to 7,288.83 after marking its lowest closing level since Sept. 17 on Monday.

Commercial Bank of Ceylon Plc led gains with a 3.88 percent rise, while conglomerate John Keells Holdings Plc rose 1.13 percent.

The day's turnover was 1.6 billion rupees ($12.25 million), more than this year's daily average of over 1.36 billion rupees.

Foreign investors bought 201.3 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflow to 9.54 billion rupees, exchange data showed. 

($1 = 130.6000 Sri Lankan rupee) 

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

Dhammika Perera advances from Sri Lanka’s tile monopoly to aluminium monopoly

The Hayleys Group led by Sri Lanka’s prominent businessman Dhammika Perera who holds the monopoly in Sri Lanka’s tile market today acquired 60.6 percent shares of the architectural aluminium extrusions producer Alufab PLC for Rs 167.9 million.

In this Crossing, 7.3 million shares were acquired at Rs. 23 each. Hayleys Groups already has the aluminium producer Alumex PLC within its fold.
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Sri Lanka 12-month Treasuries up, other bids rejected

Oct 15, 2014 (LBO) – Sri Lanka's 12-month Treasuries yield increased 11 basis points to 6.00 percent at Wednesday's auction while the state debt office rejected bids for other maturities.

The debt office said it offered 500 million rupees in 3-month bills, 2.5 billion rupees in 6-month bills and 5.0 billion rupees in 12-month bills.

The debt office which is a part of the island's central bank has accepted 14.74 billion in 12-month treasury bills after offering 8.00 billion in total for rollover.

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Sri Lanka shares close up 1.16-pct

Oct 15, 2014 (LBO) - Sri Lanka's shares gained on Wednesday with the positive price movements in banking and diversified stocks amid net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 83.36 points higher at 7,288.83, up 1.16 percent. The S&P SL20 closed 53.09 points higher at 4,064.84, up 1.32 percent.

Turnover was 1.59 billion rupees, down from 1.60 billion rupees a day earlier with 167 stocks closed positive against 33 negative.

Alufab Plc, an aluminum manufacturer who sold its 60.69 percent stake to Hayleys Plc to become a subsidiary of Hayleys had four off-market transactions of 168.32 million rupees changing hands at 23.00 rupees per share contributing 11 percent of the turnover.

A mandatory offer will be made to the remaining shareholders of Alufab, Hayleys Plc said in a stock exchange filing.

The aggregate value of all off-the-floor deals represented 34 percent of the daily turnover.

Alufab closed 4.70 rupees higher at 23.70 rupees and First Capital Holdings closed 4.70 rupees higher at 56.80 rupees, attracting most number of trades during the day.

Foreign investors bought 468.13 million rupees worth shares while selling 266.82 million rupees worth shares.

Commercial Bank of Ceylon closed 6.10 rupees higher at 163.20 rupees and John Keells Holdings closed 2.80 rupees higher at 249.90 rupees, contributing most to the index gain.

JKH’s W0022 warrants closed 10 cents higher at 73.70 rupees and its W0023 warrants closed 2.90 rupees higher at 79.00 rupees.

Hemas Holdings closed 3.60 rupees higher at 63.90 rupees and Hatton National Bank closed 5.40 rupees higher at 192.00 rupees.

Ceylon Tobacco Company closed 8.80 rupees higher at 1,145.10 rupees.

More than 50 companies in IPO pipeline: SEC Chief

As a result of the continuous awareness campaigns conducted on the benefits of listing on the Colombo Stock Exchange (CSE), there are now more than 50 companies in the pipeline seeking listings on the bourse, according to the capital market regulator.

Since end-2012, the Securities and Exchange Commission (SEC) in collaboration with the CSE has been conducting listing forums for the prospective companies in various parts of the country to create awareness on the benefits of listing.

“Today, my team tells me that there are more than 50 companies in the pipeline. Some may even take two to three years but some may come quite fast. We expect in 2015 a substantial number of companies to come into the market,” SEC Chairman Dr. Nalaka Godahewa said.

However, Dr. Godahewa told the capital market conference a lot of people had never thought about floating their firms due to the long stagnation of the stock exchange till the end of the conflict.

Since 2009 to date, there have been 73 new companies listed on the CSE taking the total listed entities on the bourse to 293.

The SEC likes to see 400 listed entities by end-2016.

However, during this year, a few companies sought delistings from the CSE and a few others are currently in the process of doing so, as they do not like to comply with the minimum free floating rules brought in by the SEC in a bid to improve the liquidity.

In Sri Lanka, the listed companies consist of only less than 5 percent of the total operationally active companies.

According to the capital market road map unveiled in November 2012, with a three-year time frame, increasing the number of listings was identified as the top most priority, as the lack of liquidity is remaining the biggest weakness in the country’s equity market.

In a bid to further encourage firms to list on the CSE, the budget 2013 proposed to offer a three-year half tax holiday for new companies that would be listed on the CSE before December 2013, and maintain a minimum of 20 percent of its shares with the public.

Despite these incentives, there was only one equity listing in 2013 raising Rs.494 million and five companies have been listed so far during this year, raising Rs.2.69 billion.

According to Dr. Godahewa, the immediate priorities for the development of Sri Lanka’s capital market are the infrastructure development, broad basing the investor base and the introduction of new products such as dollar bonds and derivative products.

“After two years, since the start of these projects, we are very much on time. I am very certain that by the end of next year, we will have completed 90 to 95 percent of the work in all these areas,” he confided.

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Lanka Aluminium sells Classic Teas control for Rs. 77 m to Indian firm

Lanka Aluminium Industries Plc said yesterday that the Board has resolved to sell 68% stake in Classic Teas Ltd., for Rs. 76.7 million to Kolkata–based Asia Tea Company Ltd.

The stake amounting to 3 million shares will be divested at Rs. 25.59 per share.

The Company said the deal was subject to regulatory approvals and will be sold to Asia Tea or its nominees.

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Cargills buys more of Kotmale

Cargills Ceylon PLC has purchased a further 5,375 ordinary voting shares at Rs.62.50 per share on the trading ?oor of the Colombo Stock Exchange (CSE).

Subsequent to this purchase the shareholding owned by Cargills (Ceylon) PLC and its fully owned subsidiaries Cargills Quality Foods Limited and Cargills Quality Dairies (Private) Limited increased from 30,103,282 (95.87%) to 30, I 08,657 representing 95.89% of the total number of shares in the issue.

Kotmale Holdings PLC is a public quoted company listed in the Colombo Stock Exchange and at present, it is the holding company of four other companies engaged in manufacturing of various dairy products. They are Kotmale Products Limited, Swiss Cheese Company Limited, Kotmale Milk Products Limited and Milife Foods Limited.
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Ramanan extends Industrial asphalts' mandatory offer

By J. Kurukulasuriya

Ceylon Finance Today: G. Ramanan who has taken controlling ownership of Industrial Asphalts PLC, and is required by the CSE regulations to make a mandatory offer to the remaining shareholders, has extended his offer deadline by 7 days, from 14 October to 4.30 p.m. on 20 October.

This has happened due to the "delay by the independent advisors to submit their views, comments and advice on the offer document of the Industrial Asphalt Company's board, within 14 days of the receipt of the offer document by the board of the offeree, as required by rule 13(2) of the Takeovers and Mergers code", says Ramanan in a filing with the stock exchange.

On 21 August G. Ramanan purchased 440,914 shares in Industrial Asphalts at Rs 201 each, thereby acquiring a total shareholding of over 66% of the shares in the company. 

Therefore it became mandatory on the part of Ramanan to make a mandatory offer to the remaining shareholders. Accordingly he made an offer, as per CSE rules, of Rs 201 per share which is the highest price paid for the share during the preceding 12 months to 21 August. Shares not owned by him amounted to 224,475 shares (33.68%).

Industrial Asphalts traded this week at a price of around Rs 262 and 250 per share.

Ramanan describes himself as an investment banker with 20 years of experience. He was head of investment banking at Hatton National Bank. He holds an MBA from the prestigious Booth School of Business, University of Chicago, which was recently featured in Ceylon Today's TRIVIA section as the 3rd best ranked Business School in the world.
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Hemas divests investment in power sector

Hemas Holdings PLC yesterday announced that it has entered into an agreement to sell its shareholding in Hemas Power PLC to a consortium of buyers, consisting of NDB Capital Holdings PLC, ACL Cables PLC and Trydan Partners Private Ltd.

The entirety of its shareholding in Hemas Power PLC will be sold for Rupees one billion six hundred and eighty million eight hundred and ten thousand (LKR 1,680,810,000). Hemas Holdings PLC represents 75% of the shareholding of Hemas Power, consisting of 93,900,000 out of the 125,200,002 ordinary shares of Hemas Power in issue. This sale is subject to regulatory approval.

Group CEO Steven Enderby said, "This is an important move for us given the change in the Group's strategic direction to realign its portfolio to focus on its core strengths of wellness, leisure and mobility. Therefore we have been looking for a new parent for this business with a stronger strategic focus to take the power business forward. The consortium of buyers was chosen after a rigorous process of evaluation by the board of directors of Hemas Holdings PLC. We wish the consortium every success going forward.

Hemas entered the power sector with its investment in a 100MW thermal power plant Heladhanavi in 2003. With its investment in the Giddawa hydro power plant in 2006, the sector entered the renewable energy segment by adding on two more plants in Agra Oya and Magal Ganga, taking the capacity up to 7MW. The company was listed in 2009 with the intention of building its presence in renewable energy space. In 2013, the company invested in a 29.3% stake of Pan Asian Power PLC, including a portfolio of two hydro power plants with a total capacity of 4.4MW.

Hemas Holdings PLC is a diversified conglomerate with a focus on four key sectors namely; healthcare, fast moving consumer goods, transportation and leisure.
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