Company pleased but analysts say share overpriced:
Ceylinco Insurance share issue raises Rs 1.13 b
The Rs. 1.5 billion Ceylinco Insurance non-voting share issue which
closed on Wednesday after 14 market days, raised only Rs. 1130 million.
However, the company was satisfied that it raised over a billion
rupees in depressed market conditions, though falling short by around Rs.
“We are happy that we managed to raise over a billion rupees under
these depressing market conditions though we fell short by the requisite
This was the highest value for a non voting share issue which was Rs.
1487 million and the price of Rs. 175 was also the highest for a non
voting share issue and we are happy that we raised Rs. 1130 million
under bear market conditions which is indeed satisfactory,” Ceylinco
Insurance Chief Executive Director Ajit Gunawardena told Daily News
He said there was also two Indian parties and a Malaysian party which
was wanting to acquire the whole issue which it rejected due to the need
for broad basing it.
“The company also did not want to underwrite the issue and that would
also have had complications and additional expenditure,” Gunawardena
He added that 25 per cent of the investors were foreign investors
while a further 25 to 30 per cent were local corporates.
The others were the local retail investors. He was also confident
that the non-voting share will soon rise to the level of voting share.
However, despite Ceylinco Insurance claiming the company has raised Rs.
1130 million, a letter from the company to the Colombo Stock Exchange’s
Assistant General Manager (Regulatory Affairs) Renuka Wijewardhana dated
July 8 said the total collected as at that date was Rs. 581,485,800.00
through 3,322,776 shares and the number of applicants as at that date
Market analysts were agog as to how a company, which had raised only
Rs. 581 million in nearly a fortnight by Tuesday could have collected a
record Rs. 600 million plus in a single day when the issue closed on
Market analysts also pointed out that the non -voting issue was far
too over priced and that the Rights Issue was anticipated. They said the
announcement of the non voting share depressed the voting share, the
latter was artificially floated which went to Rs. 220 with the investors
speculating a bonus issue. They said the local investors who bought the
non-voting share were policyholders who could not distinguish between
the non-voting and the voting share.