By Jithendra Antonio
NDB Bank’s investment arm Capital Development and Investment Company PLC (CDIC) became the highest gainer at the Colombo Bourse, gaining almost 50 percent last Friday, amidst propaganda of a possible Aviva UK exist from Aviva-NDB Insurance Plc.
Market analysts and brokers were of the view that share price of CDIC rocketed up due to capital gains that CDIC could book in if AVIVA exits from the AVIVA NDB Insurance PLC.
However, some analysts dispelled the rumours that this could be just market hype driven by speculation.
The CDIC share price surged by Rs.134.70 to close at Rs.404.20 and a total of 26,500 shares changed hands during market hours.
At present, CDIC’s largest investment is in Aviva NDB Finance Lanka (Pvt) Ltd, through which the Company holds a 36.27% stake in Aviva NDB Insurance PLC (Aviva NDB).
It is anticipated that CDIC could obtain over Rs. 2 billion capital gain in the event of Aviva exiting from its investment in Aviva NDB Insurance through a strategic sale of stake.
CDIC’s initial investment in Aviva NDB Finance Lanka (Pvt) Ltd is said to be only Rs.741 million (41.56% stake) as per financials.
As to date, Aviva NDB Insurance PLC (CTCE) market capitalization is valued at Rs.8.7 billion and CDIC would have capital inflow of approximately Rs.3.2 billion (current market value) via Aviva NDB Finance Lanka (Pvt) Ltd if CTCE stake was sold to a new investor according to market sources.
Mirror Business in April 2011 quoting foreign media report carried an article which said UK insurer Aviva would only remain in countries where Aviva’s operations provide at least $100 million in profit and gives a minimum 12% return on capital, or are valued at a minimum of $1 billion.
Aviva is present in 30 countries and it entered Sri Lanka in 2006 partnering with National Development Bank to establish Aviva-NDB Insurance, which was earlier known as Eagle Insurance
The financial accounts of CDIC further notes that the dividend income received from Aviva NDB (via Aviva NDB Finance Lanka (Pvt) Ltd.) to CDIC amounted to Rs.92 Million for 2010.
CDIC also holds a 51% stake in the ordinary share capital of NDB Aviva Wealth Management Ltd.
(NAWM) (formerly known as Eagle NDB Fund Management Company Ltd.), the largest fund Management Company in Sri Lanka, managing Assets in excess of Rs. 42 billion as at end 2010. NAWM is a unit trust and fund management company licensed by the Securities and Exchange Commission of Sri Lanka.
Subsequently, during 2010, CDIC has earned revenue of Rs..476.4 million through its investments and further revenue of Rs.188.3 million from NDB Aviva Wealth Management Ltd. CDIC’s assets are valued at Rs.5.3 billion.
In the lately published annual report of CDIC, Chairman Nihal Wadugodapitiya outlines that its parent company, National Development Bank PLC (NDB) which owns 99.6% of CDIC has repositioned CDIC as its strategic investment arm. However, CDIC currently holds only Aviva NDB and NAWM as strategic investments.
As per CDIC Chairman Wadugodapitiya, in anticipation of capitalizing on the stock market performance, during the year 2010, CDIC approved a total sum of Rs.850 million to be invested in the Colombo Stock Exchange (CSE) where Rs.750 million was managed by NDB Aviva Wealth Management Ltd.
Wadugodapitya in his annual review for 2010 further noted that through the above investments, CDIC was able to reap benefits from the soaring stock market performance during 2010 whilst the gains (both realized and unrealized) from these stock market investments added an aggregate sum of Rs.161 million during the year.
Meanwhile, CDIC financial results outlined that as at balance sheet date 31 December 2010 the portfolio value in the Quoted Equity Securities and investment in unit trusts amounted to Rs.456.9 million and over Rs.1 billion respectively.
For the quarter ended 31 March 2011, CDIC Earnings Per Share had risen from Rs.0.73 to Rs.9.74 whilst net Asset Value per Share had risen from Rs.105.29 to Rs.109.05.
source - www.dailymirror.lk
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