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Monday, June 20, 2011

Fifty million ordinary voting shares at Rs 5 each: Browns Investments goes for Rs 250 m share issue

Plans underway for star class hotel at Kosgoda:

Ravi Ladduwahetty

Browns Investments (BI) will go in for a Rs. 250 million Initial Public Offering on Thursday (June 23) aimed at building a 150 roomed beach resort in the Southern coastal city of Kosgoda. A total of 50 million ordinary voting shares will be offered at Rs 5. The offered ordinary shares will amount to 2.69 percent of the issued and paid up ordinary shares of the company subsequent to the offering. The company will be listed on the Diri Savi Board of the Colombo Stock Exchange.

The Managers to the Issue will be Taprobane Holdings Ltd while the Registrars to the Issue will be SSP Corporate Services (Pvt) Ltd. The Bankers to the offering will be Seylan Bank.

Browns Investments is to build a 150 room resort hotel in Kosgoda at the cost of Rs. 1.5 billion. The IPO will raise Rs. 250 million and the remaining 1.25 billion has already been raised via private placement where the total funds raised in the private placement was Rs. 4.5 billion, Browns Investment Ltd Group Managing Director and CEO Murali Prakash told Daily News Business yesterday.

Browns Investment Director and Chief Operating Officer Rimoe Saldin said that BI was the strategic investment vehicle of the Browns Group which invests in chosen sectors. It already has interests in plantations, leisure, construction, agriculture and exports. It also maintains a trading portfolio of listed shares and owns real-estate. The investment strategy has paid off with excellent results.

He said that of the Rs 4.5 billion which has been raised in the private placement, a total of Rs. 1 billion would be available to be used as a trading portfolio and the strategy would be to invest in businesses in the short and the medium term.

Some of the other investments would also be in the LOLC Leisure sector which involves the refurbishment of the three Southern coastal belt hotels-Eden, Tropical Villas and Riverina.

The company anticipates the generation of Rs 250 million and after the settlement of the costs of the IPO, the funds would be used for the development of a star class hotel named Samudra Beach Hotel at Kosgoda.

The hotel would be owned operated and managed by Samudra Beach Resorts (Pvt) Ltd. The estimated costs of the project will be Rs 1.5 billion and would be entirely funded by equity. The remaining funds have been raised via the private placement of the shares that took place on February 3.

The construction of the hotel project will be commencing shortly and commercial operations of the hotel will be commencing in December 2012. During this interim period the receipt of the IPO funds and the actual utilization, the funds would be invested in interest bearing financial instruments and/or government securities.

The basis of allotment would be decided in compliance with the directive issued under the Section 13 (C) and 13(g) of the Securities Exchange Commission Act No 36 of 1987 where retail individual investors would be offered 40 percent of the shares which amounts to 20 million shares, Unit Trust Investors a minimum of 10 percent of the shares and non retail investors 50 percent of the offered shares.
source - www.dailymirror.lk