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Thursday, January 6, 2011

Union Bank buys NAMAL stake

By Indika Sakalasooriya

Distilleries Group is believed to have divested its complete stake in NAMAL to Union Bank yesterday for an undisclosed amount, informed market sources told The Daily Mirror Business.

According to sources, this would be Union Bank's first step towards financial sector diversification as the bank is planning a number of ventures including investment banking.

The bank recently went for a rights issue of 10 million shares at 25 rupees each to existing shareholders and it was oversubscribed by four times. For the next phase of fund raising the bank is believed to be looking at a private placement of an additional 20 million shares.

Being the last bank to go public, Union Bank is also expected to come up with its Initial Public Offering by end of February.

NAMAL stake was up for sale and a bidding process had been set up for motion with a minimum bid around Rs.350 million, approximately Rs.50 per share.

Business tycoon Harry Jayawardena's Distilleries PLC and DFCC Bank respectively owned 70 percent and 30 percent of NAMAL. Distilleries own its holding in NAMAL through its fully owned subsidiary, Milford Exports.

Several parties who are currently running fund management outfits and those who recently announced plans to start fund management businesses were believed to have placed bids to acquire the controlling stake of Sri Lanka's oldest unit trust management company.

Harry J-led Distilleries Group acquired the controlling stake of NAMAL in 2006 from DFCC Bank while owning its own fund management unit called Aegis. Aegis Fund managed the surplus funds of Sri Lanka Insurance Corporation (SLIC), which during that time was owned by Harry J.

At the time of purchase of NAMAL's stake in 2006, a consideration of around Rs.68 million was determined by the Distilleries on the basis of the net asset value of NAMAL shares.

As sources point out, it is believed that business tycoon Harry J is consolidating his fortune into three entities - Aitken Spence, Distillaries and Milford Exports while being strategically focused, and is planning to divest some of the investments in doing so, such as NAMAL, Madulsima and Lanka Bell.

source - www.dailymirror.lk