Expolanka shares open for subscription today

By Indika Sakalasooriya

Expolanka Holdings shares will be officially open for subscription today, amidst much controversy, reservations and recommendations.

Even though certain brokers, investors, analysts, retailers as well as punters have some reservations and criticism over the pricing of the IPO share price, the general sentiment is that Expolanka Initial Public Offering is one of the largest IPOs in the post-war period of the country and will be definitely oversubscribed. It has to be so.

In case the issue gets undersubscribed, that will be interpreted as one of the biggest failures of the Asia’s best performing market.

However, it is evident that the broking and analyst communities of the Colombo bourse are divided into three major opinion camps—pro, neutral and against— over the IPO, as never seen before.

Those who are for Expolanka IPO say, the stock is offered at a discounted price, and the sell down at Rs.6 was a private matter implemented by the company’s directors, which directly has no implication on the IPO and its share price of Rs.14.

Those who are neutral opine that, though the price discrimination existing between the IPO and sell down price make them uncomfortable, the future growth prospects and the strong fundamentals of the company replace whatever reservation they may have.

And those who are against the IPO price say, Expolanka has allowed a chosen few for a head start, giving them a share at Rs.6 while giving the public at Rs.14. They also argue that under both relative and absolute valuation methods, the share price is not a discounted price.

Whatever the opinions may be, Expolanka is a good company and may have immense potential and prospects to become a blue chip or a conglomerate in the country, as well as in the region.

But wouldn’t the non-existence of a colossal difference between the sell down and IPO price provided a sense of comfort to the investor community?

IPO hopes

In a statement about the opening of the IPO for subscription, Expolanka CEO, Hanif Yusoof, said “these are exciting times for Expolanka. We expect the IPO to raise Rs.2.4 billion, which we intend to primarily use to enhance our working capital, expand warehouse capacity and restructure debt. In addition, we intend to expand our global and local footprint and concentrate on enhancing our core businesses.”

He further stressed that the group has identified various plans in moving forward and taking the company to the next level.“The group functions with a simple vision. We believe in stakeholder returns and our aim is to bring value to stakeholders. We have set ourselves some challenging growth plans which we hope will create value for all our stakeholders. “We have interests and plans in the emerging markets and also have focused interest in emerging industries in Sri Lanka as well,” he added.

Expolanka is issuing 172 million ordinary voting shares at Rs.14 per share, to raise Rs.2.4 billion.

source - www.dailymirror.lk