Historic Initial Public Offering for Colombo Stock Exchange this September
The Morning: The Colombo Stock Exchange (CSE) has revealed plans to hold the largest Initial Public Offering (IPO) in the history of the CSE in September.
Speaking to The Sunday Morning Business, CSE Chairman Dilshan Wirasekara revealed that a formal application had been received from a prospective issuer to hold an IPO, which, if listed, would be the largest in the history of the CSE.
However, he refused to divulge the identity of the prospective issuer.
Elaborating further, he stated that the CSE was currently processing the IPO and that the prospective issuer was hoping to hold the IPO by mid-September.
Commenting on the other IPOs in the pipeline, he stated: “We expect about five more IPOs this year, for which applications have already been made. We already had three IPOs this year, namely, Maharaja Foods, Cable Solutions, and Cargills Bank.
“Five more are being processed right now. While I can’t guarantee that all five will come through, I can confirm that we are currently looking at five applications. I think we will end the year with around 6-7 IPOs.”
This increased interest in listing on the CSE in 2024 stands in stark contrast to the situation over the previous two years, during which investor and issuer appetite for IPOs in the Colombo bourse was severely repressed due to the unfavourable valuations in the market following Sri Lanka’s economic crisis.
However, prior to the economic crisis, over the period from mid-2020 to 2021, the Colombo bourse saw a significant uptick in market activity as many new retail investors entered the bourse following the digitalisation of the CSE, resulting in the benchmark All-Share Price Index (ASPI) reaching its all-time high of 13,462.39 on 19 January 2022.
Amid this bull market, raising capital through equity markets was in vogue, particularly in 2021, which saw the CSE record 28 IPOs, the second highest figure recorded in the history of the bourse, behind only 2011 and 2013 when the CSE recorded 30 IPOs each year.
Out of the 28 IPOs in 2021, 14 were debt IPOs, 13 were equity IPOs, and one was an equity introduction IPO. All 13 of the equity IPOs were oversubscribed within the opening day.
OSL take:
Sri Lanka is currently on the path to expand its economy with the expansion of business/investment opportunities in the country while attracting foreign businesses/investors to invest in the country. Sri Lanka’s geographical positioning in the Indian Ocean, the strong trade ties and the target of becoming a regional hub have all given a boost to Sri Lanka’s image as an emerging business destination. The growth and business potential shown by Sri Lanka therefore have caught the attention of many foreign businesses/investors as well. The many promotional campaigns carried out by local authorities on foreign countries have also paid off given the increasing number of inquiries by foreign businesses/investors. It is in such a backdrop that Sri Lanka’s private sector, which has shown great resilience during the economic crisis witnessed by the country in the past few years, has commenced expansion programmes through IPOs in the stock market. These IPOs have opened up business/investment opportunities for foreign businesses/investors exploring opportunities in Sri Lanka. Given the country’s growth and business potential, foreign businesses/investors could confidently explore the expanding opportunities in Sri Lanka while looking at investing in IPOs at the CSE.