Sept 22, 2010 (LBO) - Sri Lanka post-war recovery is starting to capture the interest of foreign investors, making India's Religare group put more than 10 million US dollars in a financial group that has stockbroking, officials said.
India's Religare group is buying into Bartleet Mallory Stockbrokers, and its parent Bartleet Transcapital which has interests in other areas like commodities and insurance.
"Sri Lanka is a sunrise sector with huge opportunities," Sunil Godhwani, chairman and managing director of Religare Enterprises Limited (REL) said.
"There is a hunger here an aspiration here."
Sri Lanka emerged from a 30-year war in May 2009, and the stock market in particular is booming. Following more than 100 percent growth in 2009, stocks are up more than 70 percent this year.
Religare says its stockbrokering business is about 1.5 billion US dollars a day. It also own brokering business in the UK and manages funds in several countries. Its eight country presence is expected to top 15 with planned acquisitions.
This will leave the firm managing about 18 billion dollars in funds, Godhwani said.
The group also has interests in commodity broking and manages a film fund in India.
"We bring opportunities in mergers and acquisitions, corporate finance and our global asset management platform," says Shachindra Nath group chief executive of Religare.
He says the firm will invest in research in Sri Lanka and make information available through its distributing channels in multiple markets.
Religare says inquiries about Sri Lanka at Religare's capital markets office in Singapore is increasing.
India itself is generating large volumes of capital with lower inflation and a liberalized economy.
Religare is expected to invest at least 10 million US dollars in Bartleet group's stockbrokering unit which is a full member of the Colombo Stock Exchange and will benefit from any demutualization and its parent, Bartleet Transcapital.
Officials have not disclosed the split of the exact amount which could be several million US dollars higher than 10 million.
R Muralidharan, who heads Bartleet's stockbrokering unit says trading volumes in Colombo has shot up over in recent years requiring brokers to put up higher levels of capital.
Sri Lanka's Securities and Exchange Commission is also expected to increase net capital requirements of stockbrokers to over a million US dollars with most of it kept in cash.
Sri Lanka's macro-economic management is improving and the central bank is keeping a lid on inflation allowing policy interest rates to fall without printing too much money and driving inflation up, though concerns remain.
The government is also under an International Monetary Fund deal to keep spending in check.
A voracious, high spending government has been a key reason for chronic high interest rates in Sri Lanka since the early 1980s. Though deficits are still high, more of it is now being financed abroad.
Fitch lifted the outlook on Sri Lanka's B+ rating to 'positive' from 'stable' Tuesday shortly after Standard & Poors' upgraded its rating to B+ from B. Sri Lanka is now in the market to raise billion US dollars.
Officials have said that not all of it will go to fund the 8.4 percent of gross domestic deficit for 2010 but some of its will be to lengthen the maturity of a tranche of short term debt, which will improve the maturity profile of foreign borrowings.
Concerns about arbitrary rule and erosion of democratic values however has been increasing, especially after a constitutional change that has come under fire for undermining the already weak independence of the public service and judiciary.
source - www.lbo.lk
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