SEC clears $ 53 million Mazagon deal for Colombo Dockyard
Daily FT: Capital markets regulator, the Securities and Exchange Commission of Sri Lanka (SEC) has granted approval for Onomichi Dockyard Company Ltd., to sell its entire shareholding in Colombo Dockyard PLC to Indian giant Mazagon Dock Shipbuilders Ltd., for $ 53 million. In June 2025, Mazagon entered into an agreement with Onomichi and Colombo Dockyard involving a proposed investment of $ 53 million to obtain a controlling interest in the company.
The SEC approval is in response to the mandatory offer that Mazagon is required to make following the pending Rights Issue of Colombo Dockyard, in terms of the Takeovers and Mergers Code.
Last October, Colombo Dockyard announced plans for a Rs. 13 billion Rights Issue and noted that its major shareholder, Onomichi Dockyard Company Ltd., will not renounce its rights in favour of Mazagon Dock Shipbuilders Ltd., but will refrain from subscribing. The resulting rights entitlement will be allotted to Mazagon subject to shareholder approval by Special Resolution.
The issue will take place on the basis of nine new shares for every two held at a price of Rs. 40 per share, resulting in the issuance of 323,365,158 new shares.
The company said the proceeds are intended to strengthen its financial position and improve working capital in view of the financial constraints it continues to face. The funds are also expected to support ongoing operational and financial obligations.
Colombo Dockyard on 11 December closed at Rs. 217, compared to the previous closing price of Rs. 174.
As of end-September 2025, Onomichi Dockyard was the top shareholder with a 51% stake, followed by the Employees’ Provident Fund at 10%. The company reported a net asset value per share of Rs. 8.75 for the same period, down from Rs. 52.41 a year earlier.
OSL take:
The $ 53 million Mazagon deal for Colombo Dockyard indicates the ongoing economic expansion in Sri Lanka and the increasing business/investment opportunities as well as the strong private sector in the country. With Sri Lanka showing great resilience with the economy on a steady growth path after facing an unprecedented economic crisis in 2022, there is a growth in business/investment opportunities covering key economic sectors in the country. Given that Sri Lanka is on the path to becoming a regional hub supported by the country’s strategic positioning in the Indian Ocean, strong trade ties with many foreign countries and the increasing business conducive environment in the country, the many business/investment opportunities in Sri Lanka present lucrative business ventures for foreign businesses/investment on the lookout for such in the region, especially in Sri Lanka. While there are many factors that indicate Sri Lanka’s increasing business potential, the country being placed prominently in international trade plans of countries like China add further value to Sri Lanka’s business potential. Given all these, foreign businesses/investors could confidently explore the expanding business/investment opportunities in Sri Lanka including in the country’s private sector.
| Article Code : | VBS/AT/20251217/Z_3 |