Sri Lankan realty firm to launch equity fundraiser through rights issue to mobilize Rs. 3.6 billion
Lanka Realty Investments (LRI) PLC has reportedly announced a rights issue aimed at mobilizing Rs. 3.6 billion, which is viewed as the largest equity fundraiser in the sector.
The company’s Board has last week reportedly resolved to issue 96.7 million shares by way of a rights issue on the basis of one for two at Rs. 37.50 per share. Its current stated capital is Rs. 6.379 billion represented by 193.48 million shares.
Around 83% of the company’s shareholding is held by high net worth foreign investors (Terry Smith, Ian McVeigh, Piers Morgan and Joint Managing Director Archie Warman) whilst the biggest local shareholder is the Joint Managing Director Hardy Jamaldeen with a 14% stake.
According to local media reports, the Rs. 3.6 billion to be raised to part settle (Rs. 1.8 billion) of debt obligations of identified subsidiary companies; Rs. 900 million to acquire income yielding commercial assets, Rs. 450 million to develop existing properties held by two subsidiary companies and Rs. 477.7 million in fresh investments in the real estate sector.
However, the rights issue is subject to regulatory and shareholder approval.
A company spokesman has been quoted as telling the media that the move would ensure a wider investor base and enhance liquidity of the stock.
In August, LRI had concluded the largest acquisition share swap worth Rs. 5.6 billion. This move had boosted LRI’s Group asset base has increased to Rs. 10 billion from Rs. 2 billion as at end June.
In October 2017, LRI which has operations spanning over five decades, was acquired by a consortium of British and Sri Lankan investors with the aim of becoming the largest real estate company listed on the Colombo Stock Exchange (CSE).
Subsequent to the acquisition, LRI had carried out a rights issue raising Rs. 632.9 million in October 2018 and completed a Rs. 5.6 billion share swap for the acquisition of the entire shareholding in six privately-held companies which have exposure to the commercial property, affordable housing and tourism and leisure sectors, thereby expanding the Group’s overall real estate exposure, media report have stated.
Through the share swap LRI had issued 149,179,853 ordinary voting shares of the company at an issue price of Rs. 37.52 per share to the shareholders of the six private companies in return for their shares in these six companies, media reports have added.
Meanwhile, following the share swap, LRI group reportedly has 11 subsidiaries and three sub-subsidiaries with business interests in commercial property, affordable residential property, real estate land banks, leisure and manufacturing.
OSL take:
The fund raising plans of the Sri Lankan realty company is indicative of the strength and growth of the country’s private sector. It also portrays the business potential in the country. Sri Lanka’s geographical positioning in the Indian Ocean, the ease of doing business environment in the country and the many trade agreements as well as trade concessions enjoyed by the country have made it an ideal business destination in the South Asian region.
| Article Code : | VBS/AT/20191107/Z_3 |