Financial Times

Stockmarket - More than six IPOs due in next few months

By Duruthu Edirimuni Chandrasekera

There are several Initial Public Offerings (IPO) in the pipeline between late this year and early 2010, according to investment bankers, at a time when the Colombo bourse is taking off on the peace dividend after the end of the war in May.

"There are about five or six IPOs in the pipeline that we are doing and each hope to raise about Rs. 1 to Rs.2 billion," Vajira Kulatilake, CEO NDB Investment Bank told the Sunday Times FT. A stock analyst confirmed that there are many IPOs to be launched and said that important growth sectors such as textiles and software which are not represented sufficiently currently, are expected to be introduced.

“Attraction of a number of major investors should improve liquidity and reduce the transaction costs,” he said, adding that the market price earnings ratio is expected to increase up to 15 times by 2010 – 2011. “Accordingly the All Share index should increase to 3,000 by early next year, from the current level of 2,400 and it is expected that it should at least see a 20% increase,” he noted, adding that a further 25% increase could be expected in 2011.

Mr. Kulatilake noted that tourism, infrastructure and food and beverage sectors are slated to take off in post-war Sri Lanka. “Due to the Ceylinco debacle the property sector which should have taken off, has still not. Many properties are still owned by the Ceylinco firms and some are mortgaged to these companies. This is one reason that there is still a lull in this sector,” he added.

It’s also boom times at the Colombo stock market where records have been tumbling in recent times. The Colombo Stock Exchange (CSE) said on Wednesday that the market has reached record levels
It said the All Share Price Index (ASPI) of the Colombo Stock Exchange (CSE) created history on Wednesday, with the index closing at 2,779.8, the highest since May 2007. The 28-month high follows the highest ever point reached by the ASPI before being 3,016.4 on February 16, 2007. The Milanka Price Index (MPI) closed at 3,127.6 on Wednesday.

The CSE said turnovers of over Rs. 1 billion were generated on Tuesday and Wednesday, thereby recording a total turnover of Rs. 73.6 billion for the year to date. A record number of transactions were executed during the day of 14,437 trades, the second highest number of trades executed at the CSE on a given market day. The highest of 15,290 trades was recorded on June 18, 2009.

The CSE said the Colombo bourse has seen a significant growth during 2009 with the All Share Price Index (ASPI) recording a gain of 84.9% for the year to date, and the Milanka Price Index (MPI) recording a growth of 91.7%, year to date.

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