One such entity is the Distilleries Company of Sri Lanka (DCSL) who is said to be in negotiations with a high networth individual (HNWI) owning a stockbroking firm, sources close to DCSL told the Business Times.
“This HNWI is in talks with other conglomerates and entities as well, but DCSL is the frontrunner in the bid,” a source said. He said that this particular firm was set up four years ago as a joint venture between the HNWI and a foreign party, with the latter exiting Lankan operations by divesting its entire holding to the HNWI recently.
He added that a broking licence will complete DCSL’s financial sector portfolio, which is the reason why the Harry Jayawardena-controlled conglomerate is in talks with the HNWI.
“During boom times, like we saw in post-war years of 2009 and 2010, there was a lot of investor interest and all broking firms were making merry, which motivated the regulator to issue new licences. But now some broker firms, especially those which got licences four years ago have not been able to attract the expected portfolio investment and they are looking to sell their licences,” he said.
The CEO of a stockbroking firm agreed saying that many broking firms struggle to make profits and if hard times continue for long they may be out of business, but there will always be someone to buy them out. He said that some months ago an entity through its auditing firm had advertised to buy a stockbroking company, which proves this theory.
In the South Asia region, Sri Lanka has the lowest number of stockbroking firms vis-à-vis the population with a figure of just 0.5 million population per firm, whereas the figures for India, Bangladesh and Pakistan stand at 0.86 million, 1.14 million and 1.26 million, respectively, per broking firm, according to international statistics.
Stock broker seeks to sell some stakes
A large stock broking house which was on the market either for part or full divestment by the major shareholder since last year has renewed its efforts to sell two of its subsidiaries, according to stock market sources.
“The major shareholder, who is a foreign party, has given the mandate to sell these firms which have been shown to interested parties,” a source told the Business Times.
He said they are either looking to sell a part or full stake in the company and already have had discussions with some interested parties. He said the company’s asset management and the securities subsidiaries are on the market. “The sale of the asset management firm is currently being negotiated with a foreign party while the securities subsidiary is being negotiated with a local party,” he said. The source said they want to only retain their leisure arm. The company has interests in securities, finance and private equity which include tea, leisure, IT and digital entertainment.