COLOMBO: Sri Lanka's thriving stock market expects at least 60 new firms to be listed next year as companies scramble to cash in on the island's post-war economic boom, an official said Tuesday.
The Colombo Stock Exchange's benchmark All Share Price Index has climbed over 90 percent this year and is one of the best performing indices in the world, according to official figures.
"We have between 60 and 75 IPOs (Initial Public Offerings) lined up for next year that include five state entities and 35 finance companies," Securities and Exchange Commission Director General, Malik Cader, told AFP.
During 2010, 10 firms used the stock exchange to raise some 40 million dollars in capital, he said.
"Investor sentiment remains very bullish for Sri Lanka after peace was restored (with the end of fighting in May 2009). We expect the IPOs will attract a lot of foreign capital," Cader said.
Government forces crushed the separatist Tamil rebels in May 2009, ending a nearly four-decade ethnic conflict that claimed up to 100,000 lives, according to UN estimates.
The Colombo bourse rose 128 percent in 2009 as investors banked on peace and prosperity following the close of the war.
Some of the state-owned entities lined up for IPOs next year include national carrier SriLankan Airlines, its catering unit SriLankan Catering and Litro Gas, brokers say.
Cader said the IPO boom could lift the Colombo market's capitalisation to three trillion rupees (30 billion dollars) next year from the current 2.1 trillion rupees (20 billion dollars).
"Sri Lanka offers high-growth opportunities and is in the midst of transformation. This is different from other frontier markets," said Ruvini Fernando, chief executive of Guardian Fund Management, which re-launched its US dollar-denominated Sri Lanka Fund this month.
"Post-war, we will see Sri Lanka become a middle-income economy with strong economic fundamentals," said Fernando, whose mutual fund will invest in equities listed on the Colombo Stock Exchange.
The Central Bank has forecast Sri Lanka's 42-billion-dollar economy will post eight percent growth this year and about nine percent in 2011. Economic growth was 3.5 percent in 2009.
source - www.thehimalayantimes.com
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