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Below is an extract. Wonder whether is it an analysis on what happened to CSE from Mid 2010. Interesting to read the whole story.
Link: http://asiantribune.com/news/2011/07/05/sri-lanka-lolc-gained-over-600-profit-through-selling-lolc-finance-stake-156-private
Sri Lanka: LOLC gained over 600% profit through selling LOLC Finance stake to 156 private Investors
By J.A. Fernando in Colombo
Colombo, 06 July, (Asiantribune.com):
A joined business establishment with Japanese financial giant Orix Corporation, Sri Lanka’s Lanka Orix Leasing Company (LOLC) led by Business figures Rohini Nanayakkara and Ishara Nanayakkara duo had received over 600% capital gain through disposing its 10% stake of Lanka Orix Finance Company (LOFC) to nearly 156 private investors in April to May this year, financials of the company outline.
Accordingly, as per the Introductory Document of Lanka Orix Leasing Company (LOLC) released to Colombo Stock Exchange it states that LOLC subsidiary LOFC that had an initial stated Capital of Rs. 1 billion with 100 million ordinary voting shares that was then increased to 200 million shares on 11 October 2010 by issuing another 100 million shares to LOLC at Rs.10 per share from a rights issue had then subdivided company’s existing share for 14 shares on 5 April 2011 increasing share capital to 2.8 billion voting shares.
Company had then sold 10% or nearly 280 million ordinary voting shares to nearly 156 private investors at Rs.5 per share on 28 April 2011 and on 26 May 2011.
“This shows that LOLC’s initial investment is now nearly 71 cents per share in the rights issue that was concluded in October last year and LOLC has gained over Rs.4.28 per share or 600% capital gain from selling 10% stake to private investors” a top capital market analyst said.
He went on to say that as the ‘Introductory Price’ of Lanka Orix Finance Company (LOLC) is not yet been indicated and the private investors will further gain more capital at the expense of poor retailers at Colombo Bourse in the event of share prices soar by a higher percentage.
“Recently all companies that came to Colombo trading floor by Introductory Method shot up over 49% on the first day of trading perhaps even without getting caught to regulators price band that was introduced to discipline Sri Lanka’s capital market” he said.
According to filling by Colombo Stock Exchange, yet to be listed in the ‘Diri Savi’ Board of Colombo Bourse via an Introduction, Lanka Orix Finance (LOFC) will be the company with the highest number of issued share capital in the Banking and Finance sector surpassing 826.49 million issued voting share capital of SMB Leasing PLC (SEMB), and will be the second largest listed company with a higher number of issued share capital after Dialog (DIAL) which has nearly 8 billion voting shares in issue.
While the Introductory or the Reference price of the LOFC share is yet to be informed to the Colombo Bourse when it start trading on 7 July, market sources say that the parent entity of the company LOLC had raised nearly Rs.1.4 billion through a private sell down of 280 million shares or a 10% stake to 156 investors gaining over Rs.1.2 billion or a little over 614% against LOLC’s initial investment in the company just after six months time.
“Any investor can clearly understand that when LOLC sells only a 10% stake or 280 million shares at Rs.5 per share LOLC has already collected its initial investment of Rs.1 billion for subscribing 50% of LOFC’s rights in October 2010 added with 20% interest gain totaling to Rs.1.2 billion after six months in May 2011” another stock market analyst said.
However it is anticipated LOFC will start trading at Rs.5 per share on the ‘Introductory Day’.
The Introductory Document of the company outlines that LOFC on 11 October 2010 allotted a further 100,000,000 Voting Ordinary Shares at a price of Rs. 10/- per share to Lanka ORIX Leasing Company PLC by way of a Rights Issue, thereby resulting in an increase in the Stated Capital to Rs. 2 billion and increasing share capital of the company to 200 million. The it further says that LOFC on 5h April 2011 subdivided 1 existing issued and fully paid Voting Ordinary Share into 14 Voting Ordinary Shares, resulting in the existing 200 million issued and fully paid Voting Ordinary Shares of the Company being increased to 2.8 billion voting ordinary shares without affecting any increase to the Stated Capital of the Company.
It further says while the private sell down of 10% stake had taken at Rs.5 per share, as at the date of the Introductory Document, the Stated Capital of the Company is Sri Lankan still Rs.2 billion divided into 2.8 billion fully paid Voting Ordinary Shares which denotes that each share is still valued at nearly 71 cents.
Lanka ORIX Finance Company Limited (LOFC) formerly known as LOLC Finance Company Limited was incorporated in December 2001 as a wholly owned subsidiary of Lanka ORIX Leasing Company PLC (LOLC). After the commencement of commercial operations on 05 June 2003; and in order to maintain a clear distinction in the eyes of the public and customers between the name of the company (LOLC Finance Company Limited) and the abbreviated name of the Holding Company (LOLC) the Company’s name was changed on 11 July 2003 to Lanka ORIX Finance Company Limited (LOFC). As at January 2011 the Company operated through a network of 53 outlets, segregated into two broad categories namely Branches and Savings Centers. The Company has 43 fully fledged branches strategically located in commercial hubs throughout the Island nation. Sri Lanka has a total of 36 Registered Finance Companies (RFC) and 21 Specialized Leasing Companies (SLC) concentrating in the Small & Medium Enterprise (SME) and Micro Sectors in the economy operating through a network of 534 branches and 317 other outlets.
The total assets of RFCs & SLCs amount to Rs.350 billion as at 30 September 2010. LOFC accounted for 7% of the assets of RFCs as at 31 March 2010 according to the introductory document. Total lending by RFCs & SLCs amounted to Rs 240 billion as at 30 September 2010 with public deposits of RFCs reaching Rs.137 billion, 9% of which was at LOFC as per financials.
Industry sources say that LOFC has a public deposit base of nearly Rs.20 billion to date whilst the financials of LOLC group for 2010 notes that group’s public deposits under management were at Rs.11.76 billion as at 30 June 2010.
Meanwhile Colombo Bourse’s market sources, analysts and several international and local investors have raised concerns over the Kattar Aloysius’ family led Free Lanka Group, Ishara Nanayakkara led LOLC Group, and Sri Lanka’s ‘King of Bonds’ Ajith Devasurendra led Taprobane and Browns Group which are both Chaired by Rohini Nanayakkara has been listing many of the same groups’ inter companies, subsidiaries just after completing a private sell-down of shares in less than a year.
Since Sri Lanka’s capital market watchdog got a new official, Malik Cader as the Director General of the Securities and Exchange Commission with effect from 2 November 2010, Sri Lanka’s Rohini Nanayakkara led subsidiaries and associates including Hydro Power Free Lanka (HPFL), Free Lanka Capital Holdings (FLCH), has already been listed whilst Brown Investments, Lanka Orix Finance, Agstar Fertilizers, Sierra Constructions is yet to be listed in ColombBourse after an IPO or through ‘Introduction’ after a Private Placement.
LOLC,Browns,Taprobane and Perpetual Capital led Kattar Aloysius’ grandson Arjun Aloysius fame had also been bullish in Sri Lanka’s capital market since the regulator put a 10% price band to control high rise Sri Lankan stocks whilst Sri Lanka’s Central Bank’s Monetary Board managed country’s largest pension fund Employees Provident Fund (EPF) that is under the purview of Central Bank Governor Ajith Nivard Cabraal, had been actively following several major quantity buyouts of listed companies by Arjun Aloysius led Perpetual Capital and Browns fame since early this year that came in to light after EPF bought major stakes of Laugfs Gas (LGL) and Grain Elevators (GRAN). EPF recently bought stakes in Richard Pieris from Ajith Devasurendra while on 1 July island nation’s savings giant National Savings Bank (NSB) bought 1% stake of Browns (BRWN) from Harsha N. De Silva and related parties. Recently the first apparel to trade in Colombo Bourse in 2011 Orient Garments (OGL) was also listed by way of an introduction in which Harsha N. De Silva is the fourth largest shareholder with a 4.05% stake. And on the first day OGL share prices which had an introduction price of Rs.23 shot up to Rs.40 and the major shareholders dumped a considerable stake to other retailers and other high net worth investors according to market data.
At a time when Sri Lanka’s tourism is booming, in another development Sri Lankan stock market investors had been surprised by a new Hotel Development project coming up in tourism booming Pasikudah beach valued at an investment of nearly Rs.220 million or US $ 2 million that is yet to be constructed which is called to be a project owned by a top regulator of Sri Lanka’s capital market watchdog. “It is said this Leisure project coming up at Pasikudah is owned by a capital market watchdog official while some say it is owned by a top architect in the country who is related to regulatory official” a stock market analyst said.
On the contrary Securities and Exchange Commission Director General Malik Cader in lately published annual report stresses that in July 2010, prices of Colombo’s certain stocks began to rise considerably - not owing to fundamental factors but almost due to sheer speculation and ‘overheating’ in the market.
Subsequently Malik Cader says in his annual review that such price volatility that existed the market in July 2010 necessitated regulator to impose a 10%, up or down price band on all listed securities.
The move came after imposing a trading halts in respect of securities of Listed Companies including Environmental Resources Investments (ERI) warrants (GREG), Dankotuwa Porcelain (DPL), Blue Diamonds (BLUE) and Touchwood Investments (TOUCH) that showed an undue price increase which was over 30% or further above during the market days of 29 and 30 July 2010 and 2 August 2010, provided the trade volume was more than 1000.
Later market watch dog lifted the price band on all listed securities and the imposition of the 10% price band to listed securities falling within a special formula (based on price volatility and the volume traded adjusted to public holding) on a daily rollover basis for the preceding review period of 5 market days and for connected matters subject to certain specified exceptions.
However since then several stocks including some illiquid shares that hardly attract retailers and parcel buyers were the highest gainers during the many days including Kalamazoo Systems (KZOO), J.L. Morison Sons & Jones (Ceylon) PLC (MORI), Hunters & Company Limited (HUNT), Ceylon breweries PLC (BREW), HDFC Bank, Central Finance (CFIN), Miramar Beach (MIRA), Nation Lanka (CSF), and Alufab PLC (ALUF) with registered finance companies that were listed by ‘Introduction’ including Multi Finance (MFL), Chilaw Finance (CFL), Bimputh Lanka Investments (BLI) and Swarnamahal Financial Services (SFS) had shot up over in the range of 11.5% to over 48% without getting caught to regulators 10% price band according to market data.
Sri Lankan regulator has also directed to mandate all stock broking companies to obtain not less than 50% of the settlement value upfront in the form of realized funds from all investors who purchased securities which were subject to the price band mentioned above.
Annual report also note that during the year 2010 Sri Lanka’s regulator had cautioned a stock broking company with regard to a complaint made by a client in respect of the manner in which trades have been carried out in the client’s account whilst another stock broking company was directed to obtain clearance from a client in respect of a letter of demand issued by the client for approximately Rs. 89 million.
“The licence was renewed only after we received documentary evidence confirming that the client had released the stockbroker from all liability in respect of the letter of demand.” The annual review of the regulator outlines.
While Malik Cader in his annual review outlines that prior to imposing the price band from January 1 to August 4 (2010), the All Share Price Index (ASPI) grew by 54% and the daily average turnover stood at Rs. 2.0 billion, current market capitalization of Colombo Bourse has dipped to Rs.2,355.5 billion and year to date performance is 3.1% after almost reaching 7 months in 2011.
However towards the end of year 2010 despite the price band, the ASPI grew at an encouraging 96% and the daily average turnover was Rs.2.9 billion.
Meanwhile Malik Cader in his annual review that the regulatory measures taken in a timely manner reflected the vigilance and effective monitoring and thereby helped to enhance the level of investor confidence whilst adding further liquidity to the market.
- Asian Tribune -
Link: http://asiantribune.com/news/2011/07/05/sri-lanka-lolc-gained-over-600-profit-through-selling-lolc-finance-stake-156-private
Sri Lanka: LOLC gained over 600% profit through selling LOLC Finance stake to 156 private Investors
By J.A. Fernando in Colombo
Colombo, 06 July, (Asiantribune.com):
A joined business establishment with Japanese financial giant Orix Corporation, Sri Lanka’s Lanka Orix Leasing Company (LOLC) led by Business figures Rohini Nanayakkara and Ishara Nanayakkara duo had received over 600% capital gain through disposing its 10% stake of Lanka Orix Finance Company (LOFC) to nearly 156 private investors in April to May this year, financials of the company outline.
Accordingly, as per the Introductory Document of Lanka Orix Leasing Company (LOLC) released to Colombo Stock Exchange it states that LOLC subsidiary LOFC that had an initial stated Capital of Rs. 1 billion with 100 million ordinary voting shares that was then increased to 200 million shares on 11 October 2010 by issuing another 100 million shares to LOLC at Rs.10 per share from a rights issue had then subdivided company’s existing share for 14 shares on 5 April 2011 increasing share capital to 2.8 billion voting shares.
Company had then sold 10% or nearly 280 million ordinary voting shares to nearly 156 private investors at Rs.5 per share on 28 April 2011 and on 26 May 2011.
“This shows that LOLC’s initial investment is now nearly 71 cents per share in the rights issue that was concluded in October last year and LOLC has gained over Rs.4.28 per share or 600% capital gain from selling 10% stake to private investors” a top capital market analyst said.
He went on to say that as the ‘Introductory Price’ of Lanka Orix Finance Company (LOLC) is not yet been indicated and the private investors will further gain more capital at the expense of poor retailers at Colombo Bourse in the event of share prices soar by a higher percentage.
“Recently all companies that came to Colombo trading floor by Introductory Method shot up over 49% on the first day of trading perhaps even without getting caught to regulators price band that was introduced to discipline Sri Lanka’s capital market” he said.
According to filling by Colombo Stock Exchange, yet to be listed in the ‘Diri Savi’ Board of Colombo Bourse via an Introduction, Lanka Orix Finance (LOFC) will be the company with the highest number of issued share capital in the Banking and Finance sector surpassing 826.49 million issued voting share capital of SMB Leasing PLC (SEMB), and will be the second largest listed company with a higher number of issued share capital after Dialog (DIAL) which has nearly 8 billion voting shares in issue.
While the Introductory or the Reference price of the LOFC share is yet to be informed to the Colombo Bourse when it start trading on 7 July, market sources say that the parent entity of the company LOLC had raised nearly Rs.1.4 billion through a private sell down of 280 million shares or a 10% stake to 156 investors gaining over Rs.1.2 billion or a little over 614% against LOLC’s initial investment in the company just after six months time.
“Any investor can clearly understand that when LOLC sells only a 10% stake or 280 million shares at Rs.5 per share LOLC has already collected its initial investment of Rs.1 billion for subscribing 50% of LOFC’s rights in October 2010 added with 20% interest gain totaling to Rs.1.2 billion after six months in May 2011” another stock market analyst said.
However it is anticipated LOFC will start trading at Rs.5 per share on the ‘Introductory Day’.
The Introductory Document of the company outlines that LOFC on 11 October 2010 allotted a further 100,000,000 Voting Ordinary Shares at a price of Rs. 10/- per share to Lanka ORIX Leasing Company PLC by way of a Rights Issue, thereby resulting in an increase in the Stated Capital to Rs. 2 billion and increasing share capital of the company to 200 million. The it further says that LOFC on 5h April 2011 subdivided 1 existing issued and fully paid Voting Ordinary Share into 14 Voting Ordinary Shares, resulting in the existing 200 million issued and fully paid Voting Ordinary Shares of the Company being increased to 2.8 billion voting ordinary shares without affecting any increase to the Stated Capital of the Company.
It further says while the private sell down of 10% stake had taken at Rs.5 per share, as at the date of the Introductory Document, the Stated Capital of the Company is Sri Lankan still Rs.2 billion divided into 2.8 billion fully paid Voting Ordinary Shares which denotes that each share is still valued at nearly 71 cents.
Lanka ORIX Finance Company Limited (LOFC) formerly known as LOLC Finance Company Limited was incorporated in December 2001 as a wholly owned subsidiary of Lanka ORIX Leasing Company PLC (LOLC). After the commencement of commercial operations on 05 June 2003; and in order to maintain a clear distinction in the eyes of the public and customers between the name of the company (LOLC Finance Company Limited) and the abbreviated name of the Holding Company (LOLC) the Company’s name was changed on 11 July 2003 to Lanka ORIX Finance Company Limited (LOFC). As at January 2011 the Company operated through a network of 53 outlets, segregated into two broad categories namely Branches and Savings Centers. The Company has 43 fully fledged branches strategically located in commercial hubs throughout the Island nation. Sri Lanka has a total of 36 Registered Finance Companies (RFC) and 21 Specialized Leasing Companies (SLC) concentrating in the Small & Medium Enterprise (SME) and Micro Sectors in the economy operating through a network of 534 branches and 317 other outlets.
The total assets of RFCs & SLCs amount to Rs.350 billion as at 30 September 2010. LOFC accounted for 7% of the assets of RFCs as at 31 March 2010 according to the introductory document. Total lending by RFCs & SLCs amounted to Rs 240 billion as at 30 September 2010 with public deposits of RFCs reaching Rs.137 billion, 9% of which was at LOFC as per financials.
Industry sources say that LOFC has a public deposit base of nearly Rs.20 billion to date whilst the financials of LOLC group for 2010 notes that group’s public deposits under management were at Rs.11.76 billion as at 30 June 2010.
Meanwhile Colombo Bourse’s market sources, analysts and several international and local investors have raised concerns over the Kattar Aloysius’ family led Free Lanka Group, Ishara Nanayakkara led LOLC Group, and Sri Lanka’s ‘King of Bonds’ Ajith Devasurendra led Taprobane and Browns Group which are both Chaired by Rohini Nanayakkara has been listing many of the same groups’ inter companies, subsidiaries just after completing a private sell-down of shares in less than a year.
Since Sri Lanka’s capital market watchdog got a new official, Malik Cader as the Director General of the Securities and Exchange Commission with effect from 2 November 2010, Sri Lanka’s Rohini Nanayakkara led subsidiaries and associates including Hydro Power Free Lanka (HPFL), Free Lanka Capital Holdings (FLCH), has already been listed whilst Brown Investments, Lanka Orix Finance, Agstar Fertilizers, Sierra Constructions is yet to be listed in ColombBourse after an IPO or through ‘Introduction’ after a Private Placement.
LOLC,Browns,Taprobane and Perpetual Capital led Kattar Aloysius’ grandson Arjun Aloysius fame had also been bullish in Sri Lanka’s capital market since the regulator put a 10% price band to control high rise Sri Lankan stocks whilst Sri Lanka’s Central Bank’s Monetary Board managed country’s largest pension fund Employees Provident Fund (EPF) that is under the purview of Central Bank Governor Ajith Nivard Cabraal, had been actively following several major quantity buyouts of listed companies by Arjun Aloysius led Perpetual Capital and Browns fame since early this year that came in to light after EPF bought major stakes of Laugfs Gas (LGL) and Grain Elevators (GRAN). EPF recently bought stakes in Richard Pieris from Ajith Devasurendra while on 1 July island nation’s savings giant National Savings Bank (NSB) bought 1% stake of Browns (BRWN) from Harsha N. De Silva and related parties. Recently the first apparel to trade in Colombo Bourse in 2011 Orient Garments (OGL) was also listed by way of an introduction in which Harsha N. De Silva is the fourth largest shareholder with a 4.05% stake. And on the first day OGL share prices which had an introduction price of Rs.23 shot up to Rs.40 and the major shareholders dumped a considerable stake to other retailers and other high net worth investors according to market data.
At a time when Sri Lanka’s tourism is booming, in another development Sri Lankan stock market investors had been surprised by a new Hotel Development project coming up in tourism booming Pasikudah beach valued at an investment of nearly Rs.220 million or US $ 2 million that is yet to be constructed which is called to be a project owned by a top regulator of Sri Lanka’s capital market watchdog. “It is said this Leisure project coming up at Pasikudah is owned by a capital market watchdog official while some say it is owned by a top architect in the country who is related to regulatory official” a stock market analyst said.
On the contrary Securities and Exchange Commission Director General Malik Cader in lately published annual report stresses that in July 2010, prices of Colombo’s certain stocks began to rise considerably - not owing to fundamental factors but almost due to sheer speculation and ‘overheating’ in the market.
Subsequently Malik Cader says in his annual review that such price volatility that existed the market in July 2010 necessitated regulator to impose a 10%, up or down price band on all listed securities.
The move came after imposing a trading halts in respect of securities of Listed Companies including Environmental Resources Investments (ERI) warrants (GREG), Dankotuwa Porcelain (DPL), Blue Diamonds (BLUE) and Touchwood Investments (TOUCH) that showed an undue price increase which was over 30% or further above during the market days of 29 and 30 July 2010 and 2 August 2010, provided the trade volume was more than 1000.
Later market watch dog lifted the price band on all listed securities and the imposition of the 10% price band to listed securities falling within a special formula (based on price volatility and the volume traded adjusted to public holding) on a daily rollover basis for the preceding review period of 5 market days and for connected matters subject to certain specified exceptions.
However since then several stocks including some illiquid shares that hardly attract retailers and parcel buyers were the highest gainers during the many days including Kalamazoo Systems (KZOO), J.L. Morison Sons & Jones (Ceylon) PLC (MORI), Hunters & Company Limited (HUNT), Ceylon breweries PLC (BREW), HDFC Bank, Central Finance (CFIN), Miramar Beach (MIRA), Nation Lanka (CSF), and Alufab PLC (ALUF) with registered finance companies that were listed by ‘Introduction’ including Multi Finance (MFL), Chilaw Finance (CFL), Bimputh Lanka Investments (BLI) and Swarnamahal Financial Services (SFS) had shot up over in the range of 11.5% to over 48% without getting caught to regulators 10% price band according to market data.
Sri Lankan regulator has also directed to mandate all stock broking companies to obtain not less than 50% of the settlement value upfront in the form of realized funds from all investors who purchased securities which were subject to the price band mentioned above.
Annual report also note that during the year 2010 Sri Lanka’s regulator had cautioned a stock broking company with regard to a complaint made by a client in respect of the manner in which trades have been carried out in the client’s account whilst another stock broking company was directed to obtain clearance from a client in respect of a letter of demand issued by the client for approximately Rs. 89 million.
“The licence was renewed only after we received documentary evidence confirming that the client had released the stockbroker from all liability in respect of the letter of demand.” The annual review of the regulator outlines.
While Malik Cader in his annual review outlines that prior to imposing the price band from January 1 to August 4 (2010), the All Share Price Index (ASPI) grew by 54% and the daily average turnover stood at Rs. 2.0 billion, current market capitalization of Colombo Bourse has dipped to Rs.2,355.5 billion and year to date performance is 3.1% after almost reaching 7 months in 2011.
However towards the end of year 2010 despite the price band, the ASPI grew at an encouraging 96% and the daily average turnover was Rs.2.9 billion.
Meanwhile Malik Cader in his annual review that the regulatory measures taken in a timely manner reflected the vigilance and effective monitoring and thereby helped to enhance the level of investor confidence whilst adding further liquidity to the market.
- Asian Tribune -
