Hayleys to buy Singer Sri Lanka in Rs12.5bn deal

ECONOMYNEXT - Sri Lanka's Hayleys Plc said it is buying a 71 percent stake in Singer Sri Lanka Plc, a consumer durables manufacture and retailer for 12.56 billion rupees.

Hayleys and its nominees will pay 10.89 billion rupees will buy a 61.7 percent stake for 47 rupees per share immediately and another 9.47 percent stake over the next 12 to 15 months for the same price.

Hayleys in controlled by entrepreneur Dhammika Perera.

In speculative trading Singer rose to 52 rupees yesterday, higher than the disclosed price for Singer.

Hayleys has been on an acquisition spree in recent years which has pushed up leverage. 

Sri Lankan shares close little changed; tax bill weighs on market

Reuters: Sri Lankan shares closed little changed on Wednesday as local investors wait to see the real impact of the new tax bill, brokers said.

The Colombo stock index ended 0.07 percent weaker at 6,372.70. It fell 0.2 percent last week, its eighth straight weekly drop.

“Market is holding on with some crossings (block deals) in blue chips,” said Atchuthan Srirangan, a senior research analyst with First Capital Holdings PLC.

“Local investors are staying away as they are waiting to see the clarity on the new tax bill, while foreign investors are selling.”

The parliament passed tax reforms on Thursday that should simplify the tax system, widen the tax base and increase government revenue, as agreed with the International Monetary Fund in exchange for a $1.5 billion, three-year loan.

Foreign investors, who have been net buyers of 27.6 billion rupees ($180.45 million) worth equities so far this year, net sold 35.8 million rupees worth of shares on Wednesday.

Turnover was 627.3 million rupees, less than this year’s daily average of around 862.1 million rupees.

Shares of diversified conglomerate Hemas Holdings Plc fell 1.6 percent, Lanka ORIX Leasing Co Plc ended 1.4 percent weaker, Commercial Bank of Ceylon Plc dropped 0.7 percent and Dialog Axiata Plc ended down 1.7 percent.

After market hours diversified conglomerate Hayleys Plc said it had agreed to purchase 61.73 percent of Singer Sri Lanka Plc for 10.9 billion rupees.

The stock exchange had halted trading in Hayleys and Singer shares pending the announcement. 

($1 = 152.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Singer Finance Lanka to raise capital adequacy with rights issue

LBO – Sri Lanka’s Singer Finance is to raise 551 million rupees by way of a rights issue, the company said in a stock exchange filing.

Subject to exchange and shareholder approval, the company is to issue 36,740,741 ordinary voting shares at 15 rupees each in the ratio of two new shares for every nine shares held.

The proceeds will be utilized to further expand the equity base of the company and improve capital adequacy. Proceeds will also be utilized to part finance the growth in the loan portfolio of the company.

The company has obtained Central Bank approval for the rights issue. The current stated capital of the company is 1,445,333,342 rupees represented by 165,333,334 ordinary voting shares.

Sri Lanka's primary dealers to be taxed at 28-pct

ECONOMYNEXT - Sri Lanka's primary dealers in government securities will be taxed at 28 percent under a new income tax law that will go into effect in April 2018, an official said.

Primary dealers in government securities borrow short term money and invest in longer term bonds at higher rates earning and interest differential and capital gains or losses.

Under a new Inland Revenue law capital gains are taxed at 10 percent and interest income at 28 percent for companies.

Thanuja Perera consultant to Sri Lanka's finance ministry said capital gains for primary dealers are standard business income.

As a result primary dealers will be taxed at 28 percent from next year.

Under current law, primary dealers have not been paying tax on an interpretation of the existing tax law. Primary dealers pay withholding tax on bonds they buy upfront.

Sri Lanka’s Serendib Hotels buys into boutique villa chain

ECONOMYNEXT – Sri Lanka’s Serendib Hotels, part of Hemas Holdings group, said it has bought a majority stake in a company owning and operating a chain of boutique villas in southern Mirissa for Rs309 million.

A stock exchange filing said Serendib Hotels had entered into a share sale and purchase agreement and shaeholders’ agreement with First Edge Investments Ltd. to buy 445,668 shares or 51.15% of Frontier Capital Lanka (Pvt) Ltd.

Frontier Capital and its subsidiary companies own and operate a collection of boutique villas under the name of ‘Lantern Beach Collection’ in Mirrisa, known for its beaches.

Subsequent to the investment, the villas will be managed by Serendib Hotels’ fully-owned subsidiary Managed by Serendib Leisure Management Ltd. under a hotel management agreement to be entered into between the parties.

Sri Lanka’s Dialog Telecom enters financial sector buying non-bank lender

ECONOMYNEXT – Sri Lankan celco Dialog Axiata has bought a controlling stake in Colombo Trust Finance PLC, a finance company owned by the Cargills group, for just over a billion rupees, in a foray into financial services.

A controlling 80% stake of 37.5 million shares in Colombo Trust Finance PLC, formerly Capital Alliance Finance PLC (CALF), was sold on the Colombo stock exchange Tuesday at Rs28.7 per share, at a 74% premium to its last traded price.

Dialog said in a statement it bought 37,374,598 shares or 80.34% of Colombo Trust Finance PLC, from Cargills Bank Limited.

Colombo Trust Finance PLC closed at Rs18.70, up Rs2.20 or 13.33%.

Dialog Axiata said its acquisition of Colombo Trust Finance will help expand its business into mainstream digital financial services.

“Dialog aims to bring together the realms of advanced digital connectivity and cutting edge financial technology (FinTech) to delivery a revolutionary suite of products and services.”

Dialog said it will focus on financing solutions aimed at increasing the affordability and accelerating the adoption of digital devices and services by a wide spectrum of consumers and businesses.

Dialog entered financial services in 2012 with its eZ Cash mobile payments service which now has over 2.8 million mobile payment subscribers across Etisalat, Hutch and Dialog mobile networks.

“Dialog envisages that its foray into financial services would help accelerate Sri Lanka’s drive towards adoption of digital financial services by encouraging digital savings and increase access to financial services to all segments of society,” said Dialog group chief executive Supun Weerasinghe.

“Dialog would also leverage this acquisition to drive down the entry barriers for adoption of smart technology and devices through inclusive financing solutions.”

NDB Investment Bank acted as financial advisors to the acquisition while FJ&G de Saram were legal advisors to the transaction.

Singer (Sri Lanka) stock soars on take-over speculation

ECONOMYNEXT - Singer (Sri Lanka) Plc, a consumer durables retailer soared 18 percent to 52.50 rupees on take-over speculation Tuesday, brokers said.

The stock opened at 44.20 rupees and closed at 52.50 rupees, up 8.10 rupees.

Singer Sri Lanka is part of Singer Asia, which is up for sale.

A local conglomerate which already has consumer durables franchise is tipped to be front runner in the take-over race.

Sri Lanka's consumer durables sales have slowed after a currency collapse destroyed purchasing power of the people. A drought has also hit incomes in agricultural areas badly.

But Singer has a strong brand name and it has moved in to communications and information technology.