Softlogic Holdings Ltd, following the launch this week of its Rs 4.031 billion Initial Public Offering (IPO), will be aggressively pursuing expansions in their finance sector, and has recognized it as a fast growth sector along with retail and leisure, oficials said.
“We are bullish on the finance sector and will expand it ideally through acquisition,” Ashok Pathirage, Chairman Softlogic told the Business Times on the sidelines of the IPO launch set to be the largest IPO to hit the Colombo Stock Exchange so far this year. He added that Softlogic is eyeing to set up or acquire a stockbroking company and that Softlogic Capital will go into insurance, asset management, etc.
He also said that retail sector is slated to be a cash cow for the company in the short to medium term.
Proceeds of the issue are primarily to reduce debt held by Softlogic Holding and the funds will not be utilized to acquire assets or to finance acquisitions of any other businesses. Analysts present at the launch said that the group will leverage its balance sheet position to fund any future projects it has in store.
They predicted that the retail sector is slated to drive the earnings with strong demand and the group’s aggressive growth strategy. Retail outlets will grow from 75 to 250 by next year and a multi brand- multi channel strategy will lead the expansion drive. “The strong brand strength of the product will aid in healthy margins,” an analyst told the Business Times. He also said that since the country is slated to see major economic development, retail growth will follow as a result.
"It looks bright for the retail segment. Factors such as the expected growth in GDP at 8% for 2011, higher employment, increased company earnings, lower interest rates that would pilot increased borrowing, better disposable income will steer growth in this segment,” he said, adding that this is further supported by the country’s increasing household spending patterns.