Colombo bourse, top players in big game to create wealth
Colombo’s stock market, after nearly 14 years, is seeing the kind of vibrancy it has not had since 2011, with many companies’ stakes changing hands and immense wealth being created.
Stock market analysts noted that many high-net-worth individuals are looking at the market positively, making purchases of company stakes with upside potential.
Businessman Dhammika Perera, early this month, completed a 50:50 partnership with Laugfs Holdings Ltd, acquiring a 50 per cent stake through his private vehicle, Vallibel Three. Mr Perera previously bought a 39.6 per cent stake from co-founder U.K. Thilak De Silva, who resigned from the boards of Laugfs Gas and Power PLC. This follows Mr Perera’s recent acquisitions of East-West Properties and DHT Cement Ltd.
Browns Investments sold a nearly 10 per cent voting stake in Hatton National Bank (HNB) to tycoon Nandana Lokuwithana’s Ceylon Steel Corporation in a Rs. 13.82 billion deal completed on May 27, which was one of the largest private sector transactions in the stock exchange’s history recently.
Analysts said that there is a substantial appreciation in certain share prices, and certain firms are reaching these levels for the first time. “This appreciation influences the strategic holders to divest considering the great value it unlocks,” one analyst said.
Ambeon Group recently increased its stake in Ceylon Hotels Corporation PLC to 10.79 per cent by acquiring an additional 3.95 per cent of the company’s ordinary voting shares, following a prior purchase last month of a 6.84 per cent stake for Rs. 320 million. Last month, Ambeon Holdings PLC also acquired a 6.09 per cent stake in The Kandy Hotels Company PLC. Alumex PLC announced in a recent stock exchange filing that Akbar Brothers Ltd. has sold 80,169,400 shares, representing 13.39 per cent of the company’s total issued shares. Ambeon Capital PLC also acquired an 82 per cent stake in Mylands PLC for a total of Rs. 252 million with its associated parties. This acquisition includes a direct purchase by Ambeon Capital of a 51 per cent stake for Rs. 157 million.
Analysts also noted that the state-funded infrastructure projects and the stability in the government sector are also key factors for progressive sentiment in the stock market.
Brantel Lanka has increased its stake in Resus Energy PLC, surpassing the 10 per cent ownership threshold, bringing its total holding to 8,620,385 ordinary shares.
The current cost of capital is low and quite attractive to those with borrowing capacity, Senaka Kakiriwaragodage, CEO NDB Capital Holdings Ltd told The Sunday Times Business. “With the cost of capital at single digits, investors may be seeing investment opportunities with greater return potential.”
He also mentioned that the investors are seeing positive momentum and growth in the market/economy now. The real estate sector is also widely seeing a lot of interest, he said. Prime Lands Residencies PLC expanded its portfolio with the acquisition of a prime plot in Bambalapitiya Station Road, spanning over one acre, for Rs. 3.5 billion,
“Affordability increasing with the positive GDP growth momentum coupled with low interest rates, are creating a conducive environment for real estate transactions,” Mr. Kekiriwaragodage said.
A stock market analyst said that single-digit interest rates have enabled investors to seek out potential stock market investments. “Now many are looking at buying stakes of banks rather than putting money in them,” one analyst said. He said that listed companies raising money through the capital markets have also added to the vibrancy.
Analysts point out that the 4000 monthly accounts recently opened at the Colombo Stock Exchange have also increased transactions.
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