With the Colombo stock market at record-breaking levels everyday, the current time is the best for rights issues from firms wanting to cut their debt as well as those planning to expand their ventures, according to analysts.
“When a stock market is doing well, it is the right time for firms to raise cash to settle their debts as well as for their expansion projects,” Naren Godamanna, Director- Sales, Acuity Stockbrokers told the Sunday Times FT.
During the last few days Lion Brewery (Ceylon), Renuka Holdings and Touchwood announced rights issues where the latter wants to raise cash for expansion while the other are looking to reduce their gearing.
Thakshila Hulangamuwa, Vice President Business Development Asha Phillips Securities said that many such firms will announce their rights issues in the coming months.
Analysts said that the market is doing so well – that you can sell almost anything. “There is a certain herd mentality, but it is on an upward trend. Much of the good news is factored in the share prices of certain firms and the retailers are punting on them,” an analyst said.
The Hemas Power Initial Public Offering (IPO) for 31.3 million ordinary shares to raise Rs. 600 million or more was oversubscribed at Rs. 20 per share by late morning on Thursday, while NAMAL Acuity Fund IPO was also oversubscribed.
The Colombo share market created history on Thursday by recording its highest ever market capitalisation with Rs 942.6 billion while also churning a highest turnover of Rs 1.5 billion.