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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Softlogic entry into Insurance likely to pave way for unimaginable synergies

Softlogic entry into Insurance likely to pave way for unimaginable synergies

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cse_investor


Manager - Equity Analytics
Manager - Equity Analytics
@invest77

As far as I know the transaction is worth around 3.5 billion. ACAP should appreciate considerably as it's them who will book the profits. AAIC probably will go up as well, though there's no logical justification apart from the purchase price valuation.

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Softlogic's proposed acquistion of AAIC likely to be the best news market would have heard for long long time. It is different from Vallibel One's purchase of Delmege group due to so many reasons. This acquisition is expected to make Softlogic share attractive to investors leaps and bounds due to following reasons;

A) Asian Alliance (AAIC) PER is lower than the Softlogic and as a result of the proposed acquisition, Softlogic shares would be more cheaper and attractive. This was something investors have been complaining prior to the IPO.

B) Asiri and Central Hospitals are owned by the Softlogic and the acquisition of AAIC would give these hospitals a tremendoys boost and the competitive advantage of offering health care policies through AAIC. Currently no insurance company is owned by a hospital. Only possible opportunity that prevailed was between appollo hospital and Sri lanka insurance corporation. This is now far from reality after the governments repossession of the insurance corporation.

C) AAIC life insurance funds under management is approximately Rs 3bn. This will give Softlogic Capital a tremendous fee based income from the fund management. Currently these fees have boosted the Asia Capital income. Please read the Asia Capital and AAIC annual reports for more details.

D) Softlogic Finance (CRL) currently offers leasing facilities for motor vehicles. General insurance arm of AAIC together with the new ford agency under the management of Softlogic group will provide synergies any business conglomerate would dream. CRL is presently going to raise Rs 1 bn by way of a rights issue. This is likely to make CRL one of the top 5 finance companies in Sri Lanka.

E) All consumer items sold by the Softlogic group would automatically be covered by insurance from AAIC which would tremendously boost the sales.

These are just few... There will be plenty more benefits and synergies.

I am sure Softlogic starting trading price would take into consideration of all these synergies.

mohith


Manager - Equity Analytics
Manager - Equity Analytics
[quote="nkalansu"]
@mohith wrote:guys,as i mentioned earlier those who didn't subscribe to this valuable ipo,will worry like nothing eventually santa

Sophisticated investors will build businesses, grow them and become owners. The people who have built SOFTLOGIC are great businessmen. Next step would be to take the business public through an IPO. There you find two types of shareholders. 1. Selling shareholders 2. Buying shareholders.

Present owners who build the company will become selling shareholders since they give away to the public and accumulate great wealth. Bill Gates (Founder of MICROSOFT) and many other billionaires (Larry Elison : Founder of ORACLE, Sam Walton : WALMART, many Sri Lankan businessmen) became rich by taking their companies public.

What are the buying shareholders do? They buy from IPO sell it for 5 to 10 rupee gain and exit. Some may burn fingers. Some who were unable to sell/ missed the opportunity, hold on forever till you get to the IPO price to sell (eg. EXPO, FLCH, UNION BANK...etc etc....)

How sad.


lets see who will sad like nothing dir Very Happy

nkalansu


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
It appears that there are lot of promoters for SOFTLOGIC..... Very Happy

For the sake of those who are mislead by these promoters i really hope that the share price would reach at least Rs. 35/= on the first day.

I really do hope that people who bought shares from this IPO will be able to sell it for a profit. So that it would eventually improve the liquidity of the market as people have funds to invest after they sell.

This IPO has absorbed Rs. 4.0 Billion from the market which is a big amount.



Last edited by nkalansu on Sun Jul 10, 2011 10:57 pm; edited 1 time in total (Reason for editing : Additional information)

windi5


Moderator
Moderator
Hmm, ACAP and AAIC will be the immediate beneficiaries. these two shares appreciate even before the news is officially released,surely will appriciate another 10 to 20 with the declaration of the deal,both shares bit illiquid for my knowledge.
Soft entrance will be same as VONE, retailers and some of privet placements holders will dump their share to the Mkt hoping the share price decrease before middle of the trading session.
Surely AAIC will be a gem for SOFT coz its has good reputaion in the industry and resonable Mkt share. Banking and Insurance sectors are always profitable, with the peace down these two sectors will have a huge potential. Still there is a untapped Mkt in the north and east.
If deal done, other than AAIC other business are not front runners in there respective industry, CRL also not a front runner.

asitha


Senior Equity Analytic
Senior Equity Analytic
lets see what will happen.....if this announcement publish at the day of first trading ...def.it will go further 10 at least... Very Happy

Lam


Stock Analytic
Stock Analytic
@nkalansu wrote:
@thambi wrote:nkalansu - how much was softlogic offered for in private placements ??


As per page 49 of the prospectus there is information about private placements. They have raised money on two occations 8-03-2010 and 12-04-2010. Consideration for these were Rs. 72/= per share. Total issued shares in the two Private Placements were 14 million shares. Amount rasied as per prospectus is Rs. 1,008 Mn (Rs. 72 X 14 Miilion). Then They have sub divided the shares 1:10. So effectively Private Placements investors have invested for Rs. 7.20 per share. After the sub division the total number of shares is 640M.


how can it come to 640M, when 14M is sub divided 1:10 ? can you please explain?

nkalansu


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Lam wrote:
@nkalansu wrote:
@thambi wrote:nkalansu - how much was softlogic offered for in private placements ??


As per page 49 of the prospectus there is information about private placements. They have raised money on two occations 8-03-2010 and 12-04-2010. Consideration for these were Rs. 72/= per share. Total issued shares in the two Private Placements were 14 million shares. Amount rasied as per prospectus is Rs. 1,008 Mn (Rs. 72 X 14 Miilion). Then They have sub divided the shares 1:10. So effectively Private Placements investors have invested for Rs. 7.20 per share. After the sub division the total number of shares is 640M.


how can it come to 640M, when 14M is sub divided 1:10 ? can you please explain?

Actually prior to issue of new 14 M shares, already there were 50 million shares. So altogether 64 Million shares. Total amount get subdivided 1:10. So 640 M shares.

I think you should download the prospectus from www.cse.lk and have a good look at it. There are lot of information.

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
+ Good observation skills nkalansu. +

Since our mini retailers fancy buying each and every IPO, for sake of them lets hope this will go up by at least few rupees. Rolling Eyes

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka's Softlogic eyes stake in Asian Alliance Insurance

Sri Lanka’s Softlogic Holdings, a recently listed firm on the Colombo Stock Exchange is looking to diversify into insurance business by acquiring Asian Alliance, the insurance arm of listed investment bank Asia Capital, a reliable source said.

Discussions for the possible acquisition is at an ‘advanced stage’ the source confirmed.

However details of percentage stake to be divested by Asian Alliance Insurance and at what price was not disclosed.

Asian Alliance Insurance, a listed insurance firm with a market cap of 5.1 billion rupees, is ranked the sixth biggest firm in the island by the Insurance Board of Sri Lanka.

Its controlling stake of 51 percent, worth nearly 2.5 billion rupees which market sources speculate will be divested, is owned by Asia Capital.

Market buzz over the possible deal today drove Asia Capital’s share price up by 3 to 4.00 rupees, trading between 114.00 to 115.00 rupees, said brokers.

Other major shareholders of the insurer include Fast Gains International which owns 24.25 percent while Richard Pieris group claims a 15 percent stake.

Asian Alliance Insurance recorded a net profit after tax of 368 million rupees for the financial year ending 31 December 2010, a growth of 154 percent from the previous year. Its total investments amount to 3.8 billion rupees, according to the latest annual report.

The insurer is its 11th year of operation.

The deal would mark Softlogic group’s entry in to insurance business and is expected to strengthen its presence in the financial sector.

Sofltogic became the latest privately owned conglomerate to list on the Colombo bourse last month, offering an 18 percent stake or 139 million shares at 29 rupees each, to raise four billion rupees.

The group, which has business interest in hospitals, electronic and apparel retail, and leisure, listed on the Diri Savi Board will start trading tomorrow.

http://www.lbr.lk/fullstory.php?nid=201107111543026770

nkalansu


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
[quote="mohith"]
@nkalansu wrote:
@mohith wrote:guys,as i mentioned earlier those who didn't subscribe to this valuable ipo,will worry like nothing eventually santa

Sophisticated investors will build businesses, grow them and become owners. The people who have built SOFTLOGIC are great businessmen. Next step would be to take the business public through an IPO. There you find two types of shareholders. 1. Selling shareholders 2. Buying shareholders.

Present owners who build the company will become selling shareholders since they give away to the public and accumulate great wealth. Bill Gates (Founder of MICROSOFT) and many other billionaires (Larry Elison : Founder of ORACLE, Sam Walton : WALMART, many Sri Lankan businessmen) became rich by taking their companies public.

What are the buying shareholders do? They buy from IPO sell it for 5 to 10 rupee gain and exit. Some may burn fingers. Some who were unable to sell/ missed the opportunity, hold on forever till you get to the IPO price to sell (eg. EXPO, FLCH, UNION BANK...etc etc....)

How sad.


lets see who will sad like nothing dir Very Happy


To : mohith

Acquisition of AAIC has failed to impact the SOFT first day trading prices. Appears to be the most unsuccessful IPO. It appears all the private placement people have traded today. Poor retailers.

SOFT people must have done a great deal to take controlling stake of AAIC and make the announcement to the market. Main reason is to boost the SOFT first day trading. They have allowed VONE to trade before SOFT and purposely delayed the trading i think.

They have failed. Retailers have failed too. I guess SOFT promoters in this forum have nothing to say now.

May be one or two days time they will make an announcement that they have purchased SLIC to at least take the price to Rs. 29/=.

As per my previous posts this was an overvalued shoddy IPO that ripped off the retailers. How sad.

Actually I have seen posts in this forum that talked about "Shoe shine boys". I am sure now that those boys may be experiencing the unimaginable synergies of SOFT that entered the insurance industry now. Great Stuff!



Last edited by nkalansu on Wed Jul 13, 2011 12:40 am; edited 1 time in total (Reason for editing : additional information)

ssb

ssb
Manager - Equity Analytics
Manager - Equity Analytics
total shitlogic Sad

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Based on the announcement Softlogic Capital invested in AAIC is about 51% and Softlogic Holding (SHL) is about 27%.

Is Softlogic capital come under the umbrella of SHL.

If anybody reads prospectus, pls share with us

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