      |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aitken Spence gets the money
to fund it's programme for growth Times are hard. The financial hubris which marked the investment scene in Asia is long gone. But Sri Lankan conglomerates still has the charisma to interest internationally important fund managers to make investments in their offers. In fact, following a road show in the capital markets of the west and the east, Aitken Spence CEO Ratna Sivaratnam has much to crow about. Says he: 'we have been able to get the fund manager to Buckingham Palace quite interested in Sri Lanka'. And these funds are expected to be seriously committed next year. This is not all. Sivaratnam's confidence in the future of his company enabled him to make Mark Mobius, the financial guru to western investors in Asia, to take a share of what was being offered by Aitken Spence. 'I made Dr. Mobius realise that Aitken Spence is the gem in what was termed (by Mobius) as the rubble of Asian Finance'. Of course Mark Mobius had a stake in Aitken Spence equity already. But he was not interested in acquiring any more. Yet, to Sivaratnam's credit 'he has okayed his fund taking up another 450,000 shares'. The Aitken Spence CEO, his Managing Director Prema Cooray and Director Finance Trevine Jayasekera went on the road to place 7.5 million shares of Rs. 10 each at a premium. The expectation was to obtain a price of Rs. 150 per share. Despite the fact, the company not only had a growth potential but was doing very well right now, everybody had, according to Sivaratnam, asked for rebates and discounts. Eventually the Aitken Spence trio were able to make its total placement at Rs. 105 per share. The Company originally obtained permission from its shareholders to offer upto 10.4 million shares, but scaled back its plans following weak equity market conditions. It has yet the time to place the remaining 3.4 million shares locally. And Sivaratnam is confident that this would be taken up. Foreign investor resistance to investment in Sri Lanka had arisen over worries about the political situation, elections and devaluation. Yet keeping the economy and the currency on an even keel by the authorities had been to the advantage of the offer being a success, Sivaratnam told "The Island". There were other considerations prospective investors were interested in. Prema Cooray said, prospective investors did not look at Sri Lanka as a venue for industry. To them the development of service sectors, plantations and infrastructure were of far more interest. In fact Sivaratnam said other Asian countries particularly India had a massive industrial base and would be far more competetive than Sri Lanka. So what should be offered were services such as better hotels, highly productive plantations and the development of infrastructure. Following the successful placement of shares raising Rs. 737 million, Aitken Spence will now use the funds to: 1. refund the existing investment in the recently acquired plantations. 2. fund the new Maldivian hotel purchase 3. fund the two expected IPPs. Rs. 356 million is expected to be used by the Company to retire debt raised to fund the acquisition of the stakes in Elpitiya and Talawakelle plantations. Analysts have pointed out debt funding had been raised at a cost of around 14.75 per cent per annum and Aitken Spence will save approximately Rs. 21.5 million in FY 99 and Rs. 36.8 milllion in the years 2000 and 2001 now. In funding the acquisition of a 67 per cent stake in the 125 room Ohluveli Hotel in Maldives the Company will invest nearly Rs. 300 million. The hotel is expected to be taken over in coming January and earning estimates are Rs. 11.7 million in 1998. Analysts are of the opinion that with year round operations Ohluveli will contribute Rs. 51.6 millions to group net profit in the year 2000 and Rs. 59.3 million the next year. The funds acquired now are expected to earn interest of Rs. 11.4 million in the period betweeen September and December this year. The third objective is the successful completion of the power projects in partnership with Tomen of Japan. The cost to the company is put at Rs. 350 million. The funding it is said, will be 75 per cent debt and 25 per cent in equity of which Aitken Spence will take up 51 per cent. Aitken Spence despite being another victim of the bear market in the CSE has yet been a darling of analysts. Lehman Bros., the internationally famed securities company, in a report in July estimates a net revenue of Rs. 4,107 million for 1999 and Rs. 5,014 million for 2000. In a far more recent report Indosuez W. I. Carr says: 'Spen's share price has recovered slightly after falling recently to a twelve month low of Rs. 80 and at current levels it trades on a relatively attractive 7.8X FY99E net profit and a low price to growth of only 0.17X. We expect the stock to out-perform given the group's positive earnings outlook, augmented by its strong asset backing'. Now that it has got the money Directors of Aitken Spence assures of speedy action in it's programme and make the company's growth out perform current estimates.
The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of August 25, 1998 were as follows:
The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on August 25, 1998 were as follows:
Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on August 25, 1998 were as follows:
Average Weighted Prime Lending
Rate (AWRP) and Lowest Prime Rate (LPR) Average Weighted Deposit Rate
of Commercial Banks (AWDR)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||