Sri Lanka’s Orient Finance to raise Rs1bn through IPO

(LBO) – Sri Lanka’s finance sector player Orient Finance is to raise one billion rupees by way of an Initial Public Offering.

The company will offer 71.5 million ordinary shares at 15 rupees each, the company said in a stock exchange filing.

The finance company formerly known as Bartleet Finance has obtained approval from the Colombo Stock Exchange and Central Bank to list these shares on the Diri Savi board.

Subscriptions list will be open on 25 January 2016 with Kenanga Investment Corporation managing the issue.

Sri Lanka Treasuries yield up across maturities

ECONOMYNEXT - Sri Lanka's Treasuries yields rose across maturities with the 3-month yield rising 14 basis points to 6.59 percent at Wednesday's auction, data from the state debt office showed.

The 6-month yield rose 10 basis points to 6.93 percent and the 12-month yield rose 12 basis points to 7.42 percent.

The debt office which is a unit of the central bank sold only 7.0 billion rupees to real bidders and rejected other bids.

Most private bidders are asking around 8.0 percent or higher for one year bills.

An estimated 24 billion rupees of bills were maturing this week.

In the recent weeks the Central Bank had printed money to repay maturing bonds to keep interest rates down, putting synthetic printed money into the hands of savers and the banking system, driving domestic credit and imports up and hurting the currency and foreign reserves.

Analysts warn that if money is continued to be printed through Treasury bill markets, the rising interest rates will not arrest the sliding rupee.

On Wednesday the rupee strengthened to 143.95/144.05 from 144.25/35 to the US dollar.

Dialog Axiata buys into Sri Lanka e-learning firm

ECONMYNEXT – Mobile phone operator Dialog Axiata has bought a 26 percent stake in HeadStart (Pvt) Ltd., a firm creating and supplying e-learning content in Sri Lanka.

A stock exchange filing said Digital Holdings Lanka, a Dialog subsidiary, acquired the stake after converting bonds worth 20 million rupees issued by HeadStart.

HeadStart has been a strategic partner of Dialog in digital education having managed the island’s digital education portal Guru.lk through an exclusive managed services agreement with the company.

As part of the partnership, Dialog has taken up a total of 60 million rupees of convertible bonds issued by HeadStart and assigned to Digital Holdings Lanka.

Digital Holdings Lanka retains the option to convert the residual bonds in full or part to additional equity in HeadStart.

Taj hotel holding firm takes stake in Sri Lanka unit

ECONOMYNEXT – A Tata hotel holding company has taken a 24.62 percent stake in Tal Lanka Hotels which owns Taj Samudra Hotel in Colombo under a plan by the Indian conglomerate to restructure its overseas resorts.

The Netherlands-based IHOCO BV, a wholly owned investment holding company of the Tata group’s India Hotels Company Ltd, which owns the Taj Group, bought 34.4 million shares of Tal Lanka Hotels at 25 rupees a share.

Apart from Taj Samudra Hotel in Colombo, Tal Lanka Hotels manages the operations of Airport Garden Hotel at Seeduwa.

IHCL has drawn up an international restructuring plan to restructure its overseas hotel investments and bring them under one entity, IHOCO BV.

The company said in an Indian stock exchange filing that it will sell its entire shareholding in International Hotels Management Services (IHMS) South Africa, TAL Lanka Hotels and TAL Hong Kong to IHOCO BV.

Sri Lanka’s SEC to revisit public float rule

ECONOMYNEXT - Sri Lanka’s capital market watchdog the Securities and Exchange Commission (SEC) is planning to defer a rule requiring companies to publicly list up to 20% of issued shares.

Companies listed on the main board of the Colombo Stock Exchange were required to increase their public floats to 15% of issued share capital by end December 2015 and increase it up to 20% by the end of this year.

“We will revisit this rule and hold public consultations during the first quarter of 2016, and then decide what needs to be done. There are calls for some relaxation on the minimum public float,” a top SEC official said.

Already several companies have delisted or plan to do so rather than increase their public floats by diluting their holdings: Asiri Central Hospitals, Kuruwita Textile Mills, Beruwala Walk Inn have delisted and Finlays Colombo PLC, Carson Cumberbatch controlled Equity One PLC are in the process of doing so.

Carson’s Equity Two PLC and Pegasu Hotels were transferred to a secondary board. The group's oil palm units Selinsing, Shalimar, Indo-Malay and Good Hope will also be delisted. Metropolitan Resource Holdings PLC announced plans to delist earlier this week.

Royal Palms Beach Hotels, Colombo Investment Trust and John Keells PLC have requested to be transferred to the secondary board where the float is only 10%.

The 2013 budget offered a 50% tax cut for companies who listed before April 2014 and maintained a minimum 20% public float for the next three years.

In January 2014, the SEC issued a rule requiring listed companies to maintain a continuous public float of 20% by end 2016, a move viewed as overbearing regulation, despite the intension to generate more liquidity to attract investors.

Stock exchanges in India, Hong Kong, London and Oslo have a 25% minimum continuous public float requirement for listed companies. Indonesia is planning to introduce a 7.5% minimum float.

The US does not seem to have public float rules but companies that do have higher public floats are rated higher. Around 60% of S&P500 companies have free floats ranging from 98% to 99%. (http://marketcapitalizations.com/historical-data/public-free-float-sp-500/)

Facebook has a public float of 77%, Oracle Corp 74%, Wal-Mart 49%, Amazon 82%, GM 87%, Walt Disney 92%, Microsoft 93%, Coca-Cola 99%, Whole Foods 99%, General Electric 99.9% and Boeing 99.9%. Apple, AIG, Citigroup, Chevron, AT&T and Johnson and Johnson have 100% public floats.

S&P500 does not consider shares held by directors of a company, private equity and venture capital firms as public floats.

Sri Lanka bourse gets approval to list foreign firms

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has got approval from exchange control, authorities to list foreign companies, CSE chairman Vajira Kulatilaka said.

He said 2016 is going to a challenging year for stock markets globally but that the CSE would begin implementation of many capital market initiatives that had been planned.

“We just got the Exchange Control approval to start listing foreign companies here,” he said in a speech at a market opening ceremony.

“(This would be an) opportunity to banks, because that gives you confidence to lend to foreign companies because that will be listed in Sri Lanka,” Kulatilaka said.

Sri Lankan shares end at over 3-week low; further fall expected

Reuters: Sri Lankan shares fell for a third straight session on Wednesday and closed at their lowest level in more than three weeks as an expected rise in yields of government securities eroded investors' appetite for risky assets.

The yield on 91-day t-bill rose 14 basis points to a more than two-month high of 6.59 percent at a weekly auction on Wednesday, after the central bank increased statutory reserve ratio by 150 basis points with effect from Jan. 16.

The main stock index fell 0.4 percent, or 27.65 points, to close at 6,817.65, its lowest close since Dec. 14.

"We are advising investors to cash out 30 percent of their portfolio with expectation of one-year t-bill yield to move up to 10 percent by end of the first half given tight global funding for Sri Lanka," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Analysts expect more investors to shift from risky assets to fixed assets with increasing interest rates.

One-year t-bill yield was at 7.30 percent on Wednesday.

"Foreign fund is going to get difficult and the local borrowing cost is going to be high as the government will have to mainly depend on local funds," Mathew said.

The central bank on Wednesday raised the SRR by 150 basis points to 7.50 percent, to curb the excess credit growth and to stabilise the rupee hovering near record lows and slow private sector credit growth.

Foreign investors sold a net 131.9 million rupees ($916,609) worth of equities on Wednesday. They have sold a net 1.3 billion rupees worth of equities so far this year compared to 4.43 billion rupees in 2015.

Foreign selling accounted for 87.5 percent of the day's turnover of 1.4 billion rupees.

Shares in Tal Lanka Hotels Plc, which edged up 2.8 percent, accounted for around 62 percent of the day's turnover.

A 3.2 percent loss in Lion Brewery and a 2.3 percent fall in Ceylinco Insurance dragged the overall index. 

($1 = 143.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Anand Basu)

Global stock markets dive on China worries

Wall Street has continued the rout on global share markets, with the Dow Jones, S&P 500 closing down more than 1.5% and Nasdaq down 2%.

It followed sharp falls in China, where trading on the main stock markets was halted early after indexes tumbled 7%.

A survey indicating China's manufacturing sector contracted again last month was blamed for the falls.

Other Asian markets also fell, while in Europe, the FTSE 100 closed down 2.6% and Germany's Dax index dropped 4.3%.

Meanwhile, news that Saudi Arabia had broken off diplomatic ties with Iransent oil and gold prices higher.

On Wall Street, all 10 major S&P sectors were lower, led by the 2.4% fall in the technology sector. Bank stocks were also hard hit, with JP Morgan down 3.65%.

“Those are violent New Year fireworks,” said Andre Bakhos, managing director at Janlyn Capital. “That's quite a way to start the day off.”

Earlier on Monday, trading on China's Shanghai and Shenzhen stock exchanges was halted for the first time under new “circuit breaker” rules, which are designed to curb market volatility. The share price falls came after more signs of trouble in the world's second-largest economy.

The Caixin/Markit purchasing managers’ index slipped to 48.2 in December, marking the 10th consecutive month of shrinking factory activity in the sector. A reading below 50 indicated contraction.

Some analysts also attributed the decline in share prices to the imminent end of a six-month lockup period on share sales by major institutional investors, a policy implemented to shore up indexes. Big shareholders may start dumping shares once the ban is lifted on Friday.

Huang Cengdong, an analyst for Sinolink Securities in Shanghai, said: “The market will not improve because there will be heavy selling in the near future.”

Monday's sell-off in China had a knock-on across the region. Japan's Nikkei 225 tumbled 3.1% and Hong Kong's Hang Seng retreated 2.6%.

There's nothing like the herd mentality to get things started for the new year. Retail investors in the Chinese stock market are often driven by sentiment and tend to follow the crowd.

When they hear of some bad news from brokers or their friends, and other people start selling, they start selling too. Falling prices attract more people to dump their stocks, and although shares are still above their lows, authorities will be keen to avoid the kind of share market crash we saw last summer.

“Welcome to 2016, though you'd be forgiven for thinking the markets were back in August 2015 with China causing some early New Year issues,” said Spreadex analyst Connor Campbell.

And Alastair McCaig, market analyst at IG, said: “Anyone hitting the trading floor expecting a calm and quiet start to 2016 was given a rude surprise as Asian chaos affected European markets.”

Markets were also rattled by growing tensions between Middle East powerhouses Saudi Arabia and Iran over the execution of Shia cleric Nimr al-Nimr.

The execution in Saudi Arabia led to protests in Tehran. Saudi has cut diplomatic ties with Iran and given diplomats 48 hours to leave.

Iran's supreme leader has warned Saudi Arabia it would face “quick consequences” for the execution.

Supply glut’

Fearing further upheaval in the already volatile Middle East, the US has urged regional leaders to try to ease tensions.

The price of Brent crude jumped more than 3% at the start of the day on the back of heightened tensions, but then fell back sharply after US stock markets opened. In late afternoon trading, Brent was down 1% at $36.96 a barrel, while US crudewas down 1.4% at $36.52.

Analysts said the underlying trend of oversupply would continue to weigh on prices over the longer term.

“Unless we see a convincing drop in oil output from these two nations, and the broader oil-producing community, the supply glut issue will persist, which means oil prices would remain under pressure for a longer period,” said Bernard Aw at IG Markets in Singapore.

BBC

Motorised transport will have lowest priority in Port City’s Transport Plan

The vision for internal transport within Colombo Port City will give first priority to non motorised modes of transport such as pedestrian walking and cyclists; second priority to public transportation; and third priority to private motorised transport.

According to the recently released Supplementary Environmental Impact Assessment (SEIA) report, Colombo Port City will be dependent on an efficient transport system to be competitive in the international market. For this reason, the report says it is important to deliver the vision of Colombo Port City on the foundation of a sound Transport Plan, which will be based on a separate Transport Impact Assessment study (TIA) that will be carried out under the Phase 2 EIA.

In the Pedestrian Strategy, walking has been given the highest of priority in the Colombo Port City Master Plan. The most challenging aspect of walking is the weather. The high humidity and hot temperatures as well as the heavy rains that occur from time to time detract from the walking experience. Effort has been placed to negate these aspects within the Master Plan. By planting trees along the pathways and building arcades along the Boulevards, the pedestrians will be shaded. Also, by orienting the building structures to maximize the breeze, the climate on street level will be pleasant. Malls and offices will be linked with high level, roofed, pedestrian walkways. The walkways will also provide straight links along the spine of the development where the population of Colombo Port City can cover an extensive distance by foot without suffering from the elements.

The report sees the Bicycle Strategy as a sustainable form of transport since the cycle is hard matched in terms of green credentials, speed and accessibility. The distances within Colombo Port City are highly suitable for cycling as any journey by bike can be done within 10 minutes. In addition the complete lack of gradients within the development lends itself well to cycling. Accordingly, strategic road sections with a segregated cycle?way will be provided along with ample cycle parking.

The SEIA stresses that a fundamental requirement of a sustainable city concept is to develop an efficient network of public transport.

The Master Plan has been developed to incorporate a fast and reliable public transport system where the sections will be designed to provide a segregated space so that public transport is unaffected by general traffic and congestion. Furthermore, it is envisaged a ferry will service the tourist district to the north? eastern part of Port City and link to the Marina in the southeast. This service will make intermediate stops along the canal in order to complement the other forms of public transport.

Motor traffic will be allowed throughout the development with exception of a few cycles and walkways adjacent to water and through parkland. Cars will have access to all parts of Port City, but this mode has the lowest priority.

This means that signals will be setup to serve walking, cycling and public transport users first, and private motor traffic last. Within Port City the principle will be to spread traffic across as many of the roads as possible. Private car parks will serve areas primarily comprised of office and residential, where possible. A proportion of spaces equipped with charging points will be reserved for electric vehicles.

They shall be located in the most attractive part of the car park (close to pedestrian access and access points, lifts etc.). All public car parks will be equipped with detectors in order to keep track of entering and exiting cars so that variable signs can indicate if there are parking spaces available or not. 

www.dailynews.lk

Laugfs LPG Hambantota Terminal begins work

Laugfs Terminals Limited with China Huanqiu Contracting & Construction Corporation (HQC) to officially break ground for the 45,000MT Laugfs LPG Import and Export Terminal at Hambantota Port.It is an investment of over US$ 80 million allocated for the project.

The terminal will be the first step in building a regional energy distribution hub in Sri Lanka, drawing in from the Hambantota port's unique location-specific advantages. It will bring in tremendous benefits not just for the local LPG industry, but also for the country's economy through many lucrative revenue and employment opportunities.

The Laugfs Terminal will also deliver significant cost advantages to regional LPG break bulk markets and will position Sri Lanka as a central energy distribution hub with access to some of the largest emerging LPG markets in the world.
www.dailynews.lk

NSB takes over Entrust operations

The National Savings Bank (NSB) has taken over the operations of Entrust Securities PLC (ESP), on a directive of the Central Bank. This is to restore the investor confidence in Entrust and regularize its business operations.

Also, the Board of Entrust has been suspended with the appointment of the Board of NSB to act as the Board of Entrust until further notice.

Central Bank Governor Arjuna Mahendran said that on several occasions irregularities of the company including misappropriation of funds was brought to the notice of the Criminal Investigations Department as well as the CBSL.

"We contacted Entrust and last November gave them an ultimatum to present CBSL with a credible future restructuring business plan before 6 pm on Monday January 4, 2016." Mahendran said.Entrust was appointed as a licensed Primary Dealer by the Central Bank todeal exclusively in Government Treasury Bills and Treasury Bonds in April2000. Entrust Securities created history in the local debt market by being the first regulated Non Banking entity under the Public Debt Department of CBSL that got listed in the Colombo bourse. (IH)
www.dailynews.lk

Commercial Bank the highest ranked Bank in LMD 100

Commercial Bank topped the LMD 100 ranking of Sri Lanka’s leading listed companies in terms of assets, second place in overall on profit after tax (PAT) and fifth overall on turnover in the magazine’s rankings for 2014 and15.

The Bank also won the Sector Award for Banking at the ceremony.

Commercial Bank is also ranked second overall in terms of Shareholders’ Funds in this list compiled by LMD since 1993-94 when it was the LMD 50.

Commercial Bank ended the year with Total Assets of Rs 797.258 billion, Turnover of Rs 74.538 billion, PAT of Rs 11.243 billion and Shareholder’s Funds of Rs 71.206 billion.

The LMD 100’s primary ranking is based on Turnover.

“We generally benchmark our financial performance against the performances of peer banks, but it is most encouraging to see that the Bank is amongst some of the top business groups in our country,” Commercial Bank’s Managing Director and CEO Jegan Durairatnam said this is possible as a result of the depth of penetration the Bank has achieved in retail and corporate banking over the years to become an integral part of the national economy and the lives of our citizens.

In 2015, Commercial Bank was rated the most respected bank in Sri Lanka for the 11th consecutive year and the second most respected corporate entity in the country overall for the fifth successive year by LMD.

www.dailynews.lk

Access Engineering makes mark in steel structure fabrication

Access Engineering has made progress in steel structure fabrication sector in civil engineering industry with its involvement towards the civil works and steel structure fabrication and erection works related to modification to the existing cement unloading and conveying system at Ultratech Cement Lanka.

Access Engineering was awarded the main contract works of the project and the scope of the project includes the erection of a steel superstructure which is of 50m in height and 280 MT in weight and the construction of the basement and the ground floor structures. Basement floor situates 5.25 m below the ground level and the ground floor structure is 6 m high above the ground level

"A part of the project required 5.5m deep excavation to be done which was extremely challenging as the excavation had proceeded beside heavy water seepage," Project Manager Jeewaka Dahanayake said. "Yet the construction crew was working through hard weather conditions while adhering to numerous environmental regulations to complete this task on time" he further added.

Once completed, the power consumption of the plant will be reduced to 200kW from the initial power consumption of 800kW. The pumping efficiency of the system will also be increased by 30% leaving the pumping duration and the port cement ship handling time to be reduced significantly. Completion of modification to existing cement unloading and conveying system will result in minimized noise and dust generation within the area.

www.dailynews.lk

Sanken to build two hotels in Maldives

By Shirajiv Sirimane (shirajivs@gmail.com)

Sanken Overseas will invest over US$ 330 million to build two Resort hotels in Maldives, Fiji and an energy project in Africa.

In addition the company has undertaken to build four other resorts in Maldives to the value of US$ 300 million.

Sanken Overseas Chief Executive officer B. B. Kalupana said the resort branded as Havodda Amari Resorts will be opened on January 14. The property will be managed by the Onex Hospitality group and will have two suites, 58 water villas and 60 beach villas. “This is our first hospitality investment outside Sri Lanka. The first was Cinnamon Red hotel.”

Havodda Amari Resorts has made history in the Maldives being the most qickest constructed hotel. It was built in one year. The total investment was around US$ 50 million and funds were raised with a foreign partner.

Sanken’s B. B. Kalupana, Duleesha Wijesiri, and Mevan Gunatilleke in Colombo. Picture by Shirajiv Sirimane

Sanken Overseas has also requested for a second island in the Maldives to build a second resort hotel. “This too would 100 plus key property.” Both the islands are being obtained directly from the government on a 50 year ‘head’ lease. “We hope to market each room for around US$ 600.”

He said Sanken Overseas has also obtained another land in Male City to build an 88 room business hotel. “We will start construction in February and it would be another US $ 50 million investment.”Both hotels would be 50 minutes flying time away from the Maldives international airport.

Ravindra Wijesooriya, Head of Administration, Sanken Overseas, said that they employed over 700 Sri Lanka staff for the construction.

Sanken Overseas Assistant General Manager Duleesha Wijesiri said they are also looking at a major power project in Africa. “Due to intense competition we don’t want to disclose further details at this point. It would be a US $ 200 million investment.”

Special Projects Director Mevan Gunatilleke said the company is currently involved in building four resorts with over 400 rooms for clients in Germany, Turkey, Russia and Mauritius. The value of them will be in the excess of US$ 190 million.

www.dailynews.lk