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Corporate raiders and local industries
Recent investments by richindividuals in companies quoted on the Colombo bourse, apart from generating much publicity and excitement in the market, has also raised concern among the existing shareholders and management of the firms themselves.

The concern has been particularly pronounced in those firms in the island that can justifiably call themselves industrial ventures, especially the handful that have achieved hard-won success in the world market using local raw materials, capital, technology and expertise. These are the few manufacturing ventures that Sri Lanka has and they have come to their present positions after much time and effort and owing to the dedication of those pioneer businessmen who initiated the industries and stuck with them through many lean years.

Perhaps the most prominent among them are the Hayleys subsidiaries, Haycarb and Dipped Products, as well as Richard Peiris and Company. Among other industries which are not quoted on the stock exchange but which nevertheless have achieved success and prominence over several decades on the sweat and toil of local entrepreneurs and have established their own brands are firms such as Maliban, Ceylon Biscuits, DSI and Hettigoda Industries.

The concern of the existing management and shareholders of these firms is this: that sudden acquisitions of sizeable quantities of their shares by so-called high net-worth individuals and foreign investment funds whose beneficiaries are not known to the public could, but not necessarily would, destabilise industrial ventures that have been carefully nurtured over a period of several decades.

These share acquisitions might not necessarily amount to corporate "raids" or hostile take over bids, although they might be interpreted as such, but the fact that they have generated concern among existing management and shareholders cannot be denied and therefore, is an issue that needs to be addressed. These "raids" appear to have focused on some of those very manufacturing concerns that have made it big in international markets.

What the management and shareholders of these firms are calling for is more transparency on the part of these new investors who have made quite a splash with their forays into the stock market. Their concerns, and what is seen as the lack of transparency about the source of funds and the intentions of these investors, has resulted in much needless, time-consuming and no doubt, expensive litigation.
To be fair by these investors, they too have their own concerns.

After all, the whole purpose of a market economy and a share market would be nullified if investors cannot freely buy shares on the bourse and even seek positions on the directorates of these firms they are interested in, in order to have a bigger say in the way they are managed. And this is particularly so if the new shareholders feel the companies are not being managed as well as they should be by the existing management. Furthermore, if the original owners have sold much of their holdings, no doubt at a profit, and now own only a small share of their company, they have only themselves to blame if they lose control.

These are the rules of the marketplace. Hostile take overs and corporate raiders are all part of the game. Companies can't cry foul just because they have been taken by surprise or happen to dislike new shareholders since they have reaped the benefits of being quoted on the stock exchange.

Minority shareholders have said they lack adequate information about new investors in their companies and worry that these new majority shareholders are not as well known as the families that built up and managed their companies for several decades. What is perhaps required is to balance the concerns and interests of both these groups. This calls for more transparency, and less reticence, on the part of the new investors, and less alarmist rumour-mongering on the part of the corporates.

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