May 08, 2011 (LBO) - Investors who bought shares in Sri Lanka's Expolanka group in a private placement before an initial public offer at less than half the IPO price will not sell in the short term, a newspaper report said.
“Institutional and strategic investors are long term investors, having purchased the shares for long term vision and growth potential of the group," Hanif Yusoof, chief executive of Expolanka group was quoted by the Sunday Times as saying.
He told the newspaper that the private equity investors "have communicated their confidence with an expected time horizon of 18-24 months, while affirming the original view to hold it for a longer period.”
Expolanka Holdings is to raise 2.4 billion rupees by issuing 172 million ordinary voting shares at 14 rupees each with the initial public offer opening on May 12.
Previously some shares had been placed at 6 rupees each in a sell-down by the owners. Proceeds of new shares issued in the IPO will be used for expansion and to pay down debt.
The newspaper reported that John Keells Holdings (JKH), which has bought 83 million shares in the sell-down and whose subsidiary John Keells Capital is lead manager and financial advisor to the IPO, said that the company won’t be selling in the short term.
"No, JKH will not sell the holding in the short term," the Sunday Times quoted Krishan Balendra, President of John Keells Capital, as saying.
He said the JKH group would also be buying into Expolanka in the IPO.
Balendra rejected criticism that there was a conflict of interest in its investment banking unit being advisors to the IPO and the group buying shares in the private placement.
"The process leading up to it (IPO) involved a restructuring to enhance value and position the company (Expolanka) for an IPO," Balendra said.
"As a part of this restructuring, the existing shareholders partially sold down their shareholding – a part of the proceeds were utilized to acquire some underperforming subsidiaries from the company.
"The Board of Expolanka Holdings invited certain institutions, including JKH, to invest in the sell-down in order to have some blue chip institutions on their share register at the time of the IPO.
"JKH independently evaluated this investment opportunity and made a decision to invest. Similar investments of this nature have been made by JKH in the past and we will continue to make such investments in the future."
Balendra rejected criticism that the sell-down was ‘deliberately’ undersold at six rupees while 14 rupees was prescribed for the IPO so that the high net-worth individuals and institutions could make a killing by selling their stock which was bought in the sell-down in the short term.
"It was not undersold," he told the newspaper. "The pricing for the sell-down was based on the circumstances at that time. The promoter shareholders made a decision to sell at the price."
Asked about the rationale behind the pricing, Balendra said: "The pricing for the sell-down was based on the circumstances at that time based on the expected performance of the company for the financial year ending March 2011.
"The company has, post restructuring, performed beyond expectations and the IPO price is based on this as well as the expected performance for the financial year ending March 2012.
"Although there is a difference in the absolute price, the valuation is on the same basis. The pricing was based in both instances on the same multiple to forward earnings, with a small adjustment in the sell-down for the lack of liquidity and holding period cost."
source -www.lbo.lk
No comments:
Post a Comment