Investors will not be attracted to finance companies – on the long term – when the firms are listed on the stock market as a compulsory requirement before the June 2011 deadline, analysts said.
“Of the 35 registered finance companies, less than 10 are listed. Firms seeking a listing as per the rules may not be attractive as (by then) there may be too much investor exposure to the finance sector,” Deshan Pushparajah, Assistant Manager – Corporate Finance, Capital Alliance told the Business Times on the sidelines of a media conference to launch the Initial Public offering (IPO) of Vallibel Finance.
He said that some finance firms are exposed to different sections in the economy, which may also hamper some investors’ decision in invest in them. Speaking about the Rs 144 million IPO, he said that Vallibal is backed by its group’s strengths. “It has Power Erathna PLC, Royal Ceramics PLC, LB Finance PLC and Amaya Resorts which are in major sectors such as power and energy, investments, banking and finance and shipping, which show its strength,” he said, adding that the company has maintained its Non Performing Loans (NPL) ratio at an impressive 4.2% as at 31st December 2009 vis a vis the industry standard of 7.0%.
He said that Vallibel has increased its deposit base from Rs 473 million to Rs 820 million in 2009 and upto over Rs 1 billion by December 2009, while the average interest margin was 9.5% over the last three years.