By Jithendra Antonio
Transforming from zero fund value to Rs.503 million through a rights issue; Guardian Capital Partners (former Watapota Investments) is confident of its capacity to consider more private equity projects.
Outlining the future prospects of the company, Chairman Israel Paulraj stressed the last financial year was the best in relation to building scale. He noted that despite several offers to purchase the entity, major shareholder Carson Cumberbatch PLC stood firm, considering the long-term potential of the investment business.
“In this context, we analyzed the positioning of the company in the investment business, and focused on private equity as a new emerging asset class that offers attractive growth opportunity.”
Subsequently, Carson group decided to re-brand Watapota Investments to best represent its identity in the investment business, changing the name as Guardian Capital Partners PLC.
“Thus in future, majority of private equity investments of the Carsons Investment business would be carried out through this company” Paulraj pointed out.
Whilst the number and volume of pre-IPO deal flows in the Colombo stock market have increased considerably during the year with a record value of approximately Rs.12.7 billion in placements, Israel Paulraj said Guardian Capital Partners will selectively position in pre-IPO deals that satisfies the investment criteria of growth sector, competitive business model, dynamic management, strong cash flows and attractive valuations.
The annual financials of Guardian Capital Partners PLC (WAPO) notes that the first such private equity transaction entered into by the company during the year was in regional freight forwarding company, Expolanka Holdings Limited amounting to Rs.250.8 million inclusive of transaction costs.
In the review by WAPO Investment Managers, Guardian Fund Management Limited, stressed that Expolanka Holdings IPO would result in the establishment of a formal market price for the investment.
“The private equity placement was made at Rs.6 per share, and according to our forecast earnings and future valuations it gives an internal rate of return which is over our minimum target threshold of 25%,” WAPO financials outlined.
“We are encouraged by the regulator’s move to bring in a lock in period of one year for private equity investors, who infuse fresh capital to a company. This allows only the serious institutional investors with long-term interests in a placement to commit money to such projects., Investment Managers outlined in their review.
Subsequently, WAPO had selected a few that meets internal evaluation criteria set by the Investment Managers.
The Company said it recorded a loss of Rs.9 million for the financial year. Whilst the net worth of company’s balance sheet stood at Rs.508.2 million compared to Rs.102.5 million in March 2010, the financials outlined that the net asset value per share was Rs.19.67.
Chairman Paulraj in his review pointed out that there is a considerable discrepancy between the net worth of the company and the price at which the share trades in the market. “Shareholders are reminded that private equity investments are riskier and relatively illiquid by nature. They carry a higher risk weight than listed equity”. He also noted that lucrative high quality private equity investments are scarce in the country.
source - www.dailymirror.lk
No comments:
Post a Comment