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The consortium of the People's Merchant Bank (PMB) and Business Intelligence Limited (BIL) has been mandated to manage the proposed Initial Public Offering of shares in Shell Gas Lanka Limited (SGLL). The Public Enterprise Reform Commission (PERC) granted this mandate on behalf of the Government of Sri Lanka (GOSL) which intends to divest its 49% equity stake in SGLL.

PMB, which is mainly owned by People's Bank, Hatton National Bank and DFCC Bank will provide merchant/investment banking expertise to this assignment. PMB will prepare the business valuation of SGLL and advise PERC on the pricing of the shares and strategy to be adopted. The assignment also includes making the necessary underwriting arrangements.

BIL a fully owned subsidiary of Messrs Ernst and Young, an internationally reputed audit firm will perform the registrar activities pertaining to the proposed IPO.

The IPO is expected to generate considerable interest in the local stock market, being the first instance where shares in the island's leading gas company are being offered to the public. A controlling (51%) stake in SGLL was previously sold by GOSL to Shell Overseas Investments BV (SHELL) in 1995, where a price of approximately Rs.90 per share was paid. Shell is a leading international petroleum company operating over 200 filling plants in 60 countries.

Under Shell management, local sales volumes of LPG have increased from 78,000 MT in 1996 to 146,000 MT in 2000. The number of gas cylinders issued by SGLL between 1995 and 2000 has increased by over 150%. An affiliate company of SGLL opened an import and storage terminal at a cost of around US $ 85 million last year. This terminal with a capacity of 8,000 MT has quadrupled the country's storage capacity.

Analysts predict that SGLL's Net Assets Value would have increased since the controlling equity stake was purchased by SHELL. However, experts said that the IPO may be priced at a discount to the book value per share to ensure over subscription.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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